Russia 100617

Basic Political Developments Interfax: NATO wants review of joint threats with Russia to produce real results -

NATO hopes that the current review of common threats conducted by the Russia-NATO Council will result in real cooperation of all the 29 countries involved in the concrete directions they define, NATO spokesman James Appathurai told Interfax.

APA: Russia-Africa inter-parliamentary forum ends with pledge to focus on business cooperation   - The first Russia-Africa Inter-parliamentary Summit ended in Moscow on Wednesday with the over 400 participants tacitly pledging to refocus on the most pressing issues regarding developing business cooperation with Africa.

APA: Russia to construct first railway line in Libya   - The Russian Railways has announced plans to help Libya to create its own modern railroad network, and as a first step towards its practical realization, a rail welding plant has been opened in the Libyan village of Ras Lanuf, APA learns here Wednesday.

Novinite: Bulgarian PM 'Unfreezes' Belene Nuclear Plant - Speaking in Brussels late Wednesday night as cited by BNT 1, Borisov declared that the construction of Bulgaria’s second nuclear power plant was not frozen but that the government was just in the midst of a search for a new strategic foreign investor.

Novinite: Ex Minister: Turkey Wins Big if Bulgaria Quits Russian Projects - Dimitrov has pointed out that in the recent past Bulgaria failed to attract on its territory the Russian Blue Stream gas transit pipeline, which currently supplies Russian natural gas to Turkey by going under the Black Sea.He said that the failure of Bulgaria’s Belene nuclear power plant project will boost the development of the first Turkish nuclear plant for which Turkey and Russia recently signed an agreement.

Moscow News: Gas ignites new row with Belarus - In Rossiskaya Gazeta Belarussian political analyst Yury Baranchik said that the deadline was a sign that the simmering dispute had reached a “critical point”.

VOR: Lavrov, Hwan discuss tension between Koreas Xinhua: S. Korean FM calls for Russian support on ship sinking: media People’s Daily: Russia, ROK agree to alleviate tensions on Korean Peninsula BarentsObserver: China wants Nordic railway link - A railway connection from

China, through Russia, the Nordic countries and to the Norwegian port of Narvik might not be far from becoming reality, Swedish Communications Minister Åsa Torstensson maintains.

Itar-Tass: Medvedev’s visit to the US to cover economic issues, WTO – Dvorkovich: “The main result we are expecting from the visit is more intensive joint work of our companies both in the Russian and other markets on modernisation and, surely, in traditional sectors,” he said.

VOR: The Duma to debate on the new START Moscow News: No rush for new START - Although there will not be time to

debate the deal struck by presidents Dmitry Medvedev and Barack Obama before

the summer recess, Gryzlov dismissed suggestions of holding an extra session, RIA Novosti reported.

Reuters: US missile defense chief: START won't limit plans - Supermajority of 67 needed for Senate passage; Some Republicans concerned about giveaways to Russia; Cuts leave both sides able to annihilate one another

RIA: Senior U.S. diplomat praises improved relations with Russia - "I have to say there is a contrast with our ability to cooperate with Russia not just two or three years ago but even a year ago," said Philip Gordon, Assistant Secretary of State for European and Eurasian Affairs.

ST. PETERSBURG ECONOMIC FORUM o Interfax: St. Petersburg economic forum to start Thursday - This year, the

forum will start with a series of business dialogues between Russia and the EU, Russia and the U.S., Russia and India, and Russia and the CIS.

o VOR: Saint Petersburg hosts 14th International Economic Forum - The Presidents of Russia and France, Dmitry Medvedev and Nicolas Sarkozy, are expected to address the forum as part of the ‘Revising global development’ conference.

o VOR: Economic Forum to open in St. Petersburgo BBC: Russian economic forum to promote new reform policies - Sergey

Aleksashenko, director of Macroeconomic Research at the Higher School of Economics in Moscow, says that the forum is a political PR event, used by the Russian government to promote modernisation as well as the country's political system.

o RIA: MTS to present iPad analogue at St. Petersburg forum - Kommersant said that while MTS's tablet computer, based on the Android 19 operating system, will be no match for the much-hyped Apple iPad, the odds are it will outdo the iPad on the Russian market.

o Moscow Times: Sailing Toward Soviet Stagnation - In recent years, the St. Petersburg International Economic Forum has become a major event in Russian business and political life. The forum is the meeting point for global CEOs and policymakers with an interest in Russia. It is also the place for the key speeches of Russia’s top leaders, including the president and ministers.

o Russia Today: Leaders of tomorrow in St Petersburg - Young business people have been getting together in St Petersburg to swap ideas at the International youth economic forum.

Panorama.am: President Serzh Sargsyan travels to St. Petersburg News.az: Moscow, Ankara compete to consolidate positions in Karabakh peace

process - Any breakthrough should not be expected in the Karabakh peace process.

RIA: Kaczynski hopes for bright future of Polish-Russian relations - "I hope that these relations will enter a phase of normal contacts, and later transform into mutually-beneficial relations," Kaczynski, who is the leader the leader of Poland's Law and Justice Party, said in an interview with RIA Novosti on Wednesday.

UKZAMBIANS: Zambian student remains arrive - The Zambian student died in Russia in mysterious circumstances at Kazan State University.

RUSSIA-KYRGYZSTANo RIA: Death toll in Kyrgyz ethnic clashes close to 2,000 - source o Trend.az: From the south of Kyrgyzstan evacuated 180 citizens of Russia -

Consul o VOR: Russian planes deliver aid to Kyrgyzstano Russia Today: Kyrgyz violence – allegations of genocideo Russia Today: Cases of cash paid for Kyrgyz unrest – former president -

Criminals and unemployed youths were paid in suitcases of cash to start bashing people up and set everything on fire, shared Askar Akayev, the country's president from 1990 to 2005, with RT.

o Russia Profile: Kyrgyzstan: a Perfect Storm - Are Malignant Forces Trying to Harness a Perfect Storm of Political Instability, Economic Hardship and Ethnic Tension?

o Kuwait Times: Russia's poisoned chalice - Analysts said Russia's influence over the Central Asian state appears to be a poisoned chalice as both a military interference and non-involvement could have grave repercussions for years to come. "Russia does not want to be accused of directly interfering in Kyrgyzstan because of the potential for a much wider conflict in the region that would almost certainly bring Uzbekistan and Tajikistan into any expanded conflict," said Chris Weafer, chief strategist with Uralsib investment bank in Moscow.

Itar-Tass: Police block Gakayev's gang in highland Chechnya Interfax: Two servicemen injured in operation in Chechnya AP: Analysis: A new venue for US-Russian cooperation - A fresh crisis in former

Soviet Central Asia offers an opportunity for cooperation when Russian President Dmitry Medvedev calls on President Barack Obama at the White House next week.

Premier.gov.ru: Prime Minister Vladimir Putin chairs a meeting of the Government Presidium

Premier.gov.ru: Prime Minister Vladimir Putin holds a meeting on the spending on national defence, security and law enforcement in the federal budget for 2011-2013

FT: Time, and credit, running out for ‘Putin’s banker’ - Will the Russian government cut off the man once dubbed “Putin’s banker”? It might seem a highly unlikely proposition. But investors are worried that Sergei Pugachyov, the mysterious founder of Mezhprombank and a senator representing the Siberian republic of Tuva, could become the first high profile Russian tycoon to default on a eurobond since the 2008 crisis swept the market.

WSJ: Medvedev's Star Adviser - Arkady Dvorkovich has been charged with turning the Russian President's tough talk into action

RFE/RL: Protest In Russia Against 'Commercialization Of Education' - About a dozen activists rallied on June 16 in central Russia to protest the "commercialization of education" in the country, RFE/RL's Russian Service reports.

Itar-Tass: Forest fires sweep large areas in Russia's Far East

National Economic Trends Bloomberg: Shuvalov Says Easy Money Should Stay Away From Russian Stocks

- “I’d be very cautious about stock investments in this country,” Shuvalov said yesterday in an interview with Bloomberg Television in Moscow. “I would welcome real investors who can build factories, something new in this country.”

Interfax: Banks have 506.1 bln rbs on CBR correspondent accounts on June 17 RIA: Russia may increase taxes to patch budget holes in 2011 - In order to patch

budget holes, finance ministry officials have proposed raising some taxes, including the mineral extraction tax and export duties on raw materials, Vedomosti said. This would give the country an additional 379.2 billion rubles ($12.1 billion) in 2011, 396.6 billion rubles ($12.7 billion) in 2012 and 449.5 billion rubles (14.4 billion) in 2013, it said.

Business, Energy or Environmental regulations or discussions Reuters: Russian markets -- Factors to Watch on June 17 Russia's central bank has requested that International Industrial Bank (IIB),

owned by Russian businessman Sergei Pugachev, pay down 31 billion roubles of collateral-free loans before it provides further financing, Vedomosti writes.

Russian state-controlled oil company Rosneft wants to increase its stake in CPC, the only privately owned pipeline crossing the Russian territory, to nearly 10 percent from 3.83 percent it currently controls, Kommersant reports.

Bloomberg: OAO Razgulay, OAO Lukoil: Russian Stock-Market Preview RenCap: New legislation will preserve status quo on distco last-mile disputes Financial: EBRD funds Russian science and technology park Reuters: Arabtec says not told of any Russia work-stop order VTB Capital: Government might cancel import duty for aircraft with over 250

seats BNS: Aircraft manufacturers Antonov, UAC to form joint venture Bloomberg: Russia Calls in International Industrial’s Debt, Vedomosti Says Bloomberg: RusHydro Seeks $45 Billion Market Value by 2015, Vedomosti Says Alfa: RusHydro approves its new strategy until 2015 Interfax: Chelyabinsk Zinc posts 458 mln rubles net profit to IFRS in Q1 Bloomberg: Chelyabinsk Zinc Swings to Quarterly Net of 458 Million Rubles VTB Capital: EVRAZ's Vitkovice might be partially shut down UralSib: Highland Gold: Belaya Gora project receives support from regional

government Reuters: UPDATE 1-AvtoVAZ posts wider loss for 2009 DJ: AvtoVAZ, Renault Seek Tough Russia-Production Rules –Vedomosti VTB Capital: Sberbank considers acquiring a controlling stake in a Polish bank S&P: Russian OJSC Alfa-Bank Outlook Revised To Positive On Financial Profile

Improvements; 'B+/B/ruA+' Ratings Affirmed People’s Daily: Russian entertainment market forecast to grow 10 percent

annually - Entertainment will be a sector in Russia that enjoys annual growth of as much as 9.3 percent over the next five years, PricewaterhouseCoopers forecasts.Broadband TV News: Russian CTC channel debuts in Israel

RusBizNews: Forest Trap on the Railroad - Several months ago, the Sverdlovsk Railways halved the car supply to forestry enterprises.

Otkritie said Wednesday that it may sell as much as 15 percent of its merged banks to the International Financial Corp., the World Bank’s private-sector arm, this year. (Bloomberg)

Sistema on Wednesday posted profits of $163.5 million, compared with a net loss of $395.5 million a year earlier, the company said. (Bloomberg)

Activity in the Oil and Gas sector (including regulatory) Bloomberg: Rosneft Seeks Former BP Stake in Caspian Pipe, Kommersant Says Oil and Gas Eurasia: Ukraine Dictates Pipeline Conditions to EU, Russia Ukrainian Journal: Prime minister speaks of ‘exit’ from RosUkrEnergo ruling

dilemma Moscow Times: Government Puts Off Decision on East Siberian Oil Duties China Knowledge: Sino-Russia oil pipeline to start operation at end-Oct Reuters: Rosneft, Chevron to develop Russia oil field –sources Upstreamonline: Uzbekistan well hits home for partners - Russian explorer Lukoil

said today it has hit gas during drilling of the first exploration well in the Aral licence in Uzbekistan.

Capital.gr: TNK-BP Loses Bid To Recover Interest On Excess Tariffs –Vedomosti

Oil and Gas Eurasia: Kazakhstan Hopes to Find Russia Investor For Pavlodar Refinery

Gazprom Gulf News: Gazprom sets foot in Djibouti Free Zone Reuters: Gazprom, A2A gas joint venture wins EU approval Standart: Gazprom Courting Bulgaria’s Neighbors Over South Stream Telegraf.by: Contract with Beltransgaz not Dependant on in-Russian Prices,

Gazprom

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Full Text Articles

Basic Political Developments

Interfax: NATO wants review of joint threats with Russia to produce real resultshttp://www.kyivpost.com/news/russia/detail/69928/

Today at 09:46 | Interfax-Ukraine NATO hopes that the current review of common threats conducted by the Russia-NATO Council will result in real cooperation of all the 29 countries involved in the concrete directions they define, NATO spokesman James Appathurai told Interfax.

Firstly, there is an unrevealed suspicion in some circles that NATO and Russia are still afraid of each other. The suspicion should be removed, Appathurai said, commenting on the agenda of Wednesday's session of the Russia-NATO Council at ambassador level.

Secondly, so far NATO and Russia have evaluated the priority of the 21st century threats differently, he said. In his opinion, a short list of priorities should be made that will permit purposeful work.

Thirdly, in his opinion, concerted and purposeful cooperation will become possible as soon as this list is compiled.

Appathurai said NATO has a strong willingness to develop true and practical cooperation with Russia in the spheres that are important not only for the bloc but also for Russia and to finally build cooperation based on trust.

Naturally, NATO would want Russia to feel the same, the spokesman said.

This is a practical way of building a foundation on which all the 29 countries could rely on to do practical things that are important for everyone, he said.

On behalf of 28 NATO countries Appathurai said that NATO wants the joint review of threats to produce real results, instead of remaining and exercise on paper.

The joint review of common threats was a key item on the agenda of the Wednesday meeting of the Russia-NATO Council.

Read more: http://www.kyivpost.com/news/russia/detail/69928/#ixzz0r63BHgok

APA: Russia-Africa inter-parliamentary forum ends with pledge to focus on business cooperation   http://www.apanews.net/apa.php?page=show_article_eng&id_article=126490

APA-Moscow (Russia) The first Russia-Africa Inter-parliamentary Summit ended in Moscow on Wednesday with the over 400 participants tacitly pledging to refocus on the most pressing issues regarding developing business cooperation with Africa.

The summit, which brought together Russia and African parliamentarians, entrepreneurs, academic scientists and social activist, has identified further tasks of interaction under plans to promote business and inter-cultural dialogue. Also, some regional strategies in this area were outlined, with emphasize on such sectors as energy, technology, mineral resources exploitation, agriculture, infrastructure, education and tourism.

The summit also noted that Africa has made significant progress in democracy, conflict resolution and improvement in investment climate which are strong reasons for Russian investment and cooperation with Africa.

During the summit and business forum, a series of plenary sessions were held as well as discussions on the role of parliamentary diplomacy in resolving security and democratic development issues on the African continent.

The participants welcomed the notion of the Russian political leaders that Russia should “return to Africa” and that the established relations to be based on mutual respect, mutual benefit and free from all ideological dogmas.

The participants finally emphasized the importance of bilateral contacts, including both at local and regional levels, as well as multilateral international forums and meetings of parliamentarians which should strengthen the existing solidarity and friendship between Russia and Africa.

  KKK/daj/APA 2010-06-17

APA: Russia to construct first railway line in Libya   http://www.apanews.net/apa.php?page=show_article_eng&id_article=126491

APA-Moscow (Russia) The Russian Railways has announced plans to help Libya to create its own modern railroad network, and as a first step towards its practical realization, a rail welding plant has been opened in the Libyan village of Ras Lanuf, APA learns here Wednesday.

The new plant is part of a contract awarded to Russian Railways for the construction of a 550 kilometre railway line between the towns of Sirte and Benghazi.

A spokesman for Russian Railways, Dmitri Bertsev, said : "Initially the train speed on this stretch between Sirte and Benghazi will be 160 km per hour but after its electrification it will reach 250 km per hour. Under the project, around 1000 artificial structures are to be built, 30 rail and 23 road flyovers, and six major stations along with 24 minor stations."

The Ras Lanuf welding plant is a facility consisting of administrative and industrial premises and recreation facilities. The plant has a planned production capacity of 500 km of track per annum. At this plant, the Russian specialists will work with the Libyans, sharing their experiences with them.

Dmitri Bertsev said : "This will be the first railroad in Libya that is why in the beginning there was no infrastructure for our 4-year project. But we are gradually building all necessary facilities. We started with the exploration of the territory, after that the project was outlined. After that we built houses and facilities for our workers. And now the plant has been launched and we begin to produce rails."

The Russian Railways project in Libya is reminiscent of the construction the Aswan dam on the Nile River in Egypt 50 years ago, which great construction (in which the Russian engineers also took part) totally changed the image of Egypt. The construction of the

railroad in Libya also promises to change the image of the country and make it become an important railroad link in North Africa.

  KKK/daj/APA 2010-06-17

Novinite: Bulgarian PM 'Unfreezes' Belene Nuclear Planthttp://www.novinite.com/view_news.php?id=117226

Energy | June 17, 2010, Thursday

Bulgarian Prime Minister Boyko Borisov has reversed his words that the project for the construction of the Belene Nuclear Power Plant is “frozen”.

Speaking in Brussels late Wednesday night as cited by BNT 1, Borisov declared that the construction of Bulgaria’s second nuclear power plant was not frozen but that the government was just in the midst of a search for a new strategic foreign investor.

Last Friday, the Prime Minister made the headlines with a similar, yet different statement that the construction of the Belene NPP was frozen while the search for a new investor is going on.

The project for the new plant, which is to be constructed by the Russian state company Atomstroyexport, has run into trouble after its cost was estimated to be much higher than the previously projected EUR 4 B, and after the selected strategic investor, Germany’s RWE, which was supposed to provide half of the investment, withdrew in the fall of 2009.

The Bulgarian Prime Minister has also commented on Wednesday’s talks between Gazprom and Romania for the latter’s joining the South Stream gas transit pipeline project. He welcomed this development saying that Romania’s participation in the project is good news for Bulgaria.

Novinite: Ex Minister: Turkey Wins Big if Bulgaria Quits Russian Projectshttp://www.novinite.com/view_news.php?id=117219

Energy | June 16, 2010, Wednesday

Turkey is going to benefit huge if Bulgaria decides to withdraw from any of the large-scale Russian-sponsored energy projects, according to former Economy Minister Petar Dimitrov.

Dimitrov has pointed out that in the recent past Bulgaria failed to attract on its territory the Russian Blue Stream gas transit pipeline, which currently supplies Russian natural gas to Turkey by going under the Black Sea.

He said that the failure of Bulgaria’s Belene nuclear power plant project will boost the development of the first Turkish nuclear plant for which Turkey and Russia recently signed an agreement.

According to the former Minister of Economy and Energy in the Stanishev government (2007-2009), Bulgaria’s refusal to participate in the Burgas-Alexandroupolis oil transit pipeline is going kill the project and will pave the way for the alternative route through Turkey, Samsun-Ceyhan.

“Our natural resources are such that we have no oil, gas, or nuclear fuel, i.e. we are dependent on energy imports,” Dimitrov declared before Nova TV Wednesday reiterating the well-known position of the critics of Bulgaria’s current center-right government of the GERB party with respect to the three Russian-sponsored energy projects – the Belene NPP, the Burgas-Alexandroupolis oil pipeline and the South Stream gas transit pipeline.

Moscow News: Gas ignites new row with Belarushttp://www.mn.ru/politics/20100617/187877013.html

by Andy Potts at 17/06/2010 11:19

Russia has imposed a five-day deadline for Belarus to pay an outstanding debt of $192 million or face a cut-off.

And while Minsk mutters about a lack of ready cash to foot the bill, energy giant Gazprom is making menacing noises about upping its charges as relations between the neighbouring countries stutter.

The two countries are struggling to complete a long-planned customs union, while there is lingering unhappiness in Russia that Belarus has still chosen not to recognise the independence of South Ossetia and Abkhazia, almost two years after Moscow supported the territories’ bid to break away from Georgia.

By threatening a gas shutdown the Kremlin may be seeking to pressure president Alexander Lukashenko on the eve of presidential elections, according to analysts.

In Rossiskaya Gazeta Belarussian political analyst Yury Baranchik said that the deadline was a sign that the simmering dispute had reached a “critical point”.

He added that Minsk needed to make concrete proposals about paying its bills and cementing bilateral relations within five days.

Officials in Belarus have yet to react to the deadline, but last week Lukashenko visited Moscow and complained that there wasn’t enough money to pay the debt, which was due on June 1.

But president Dmitry Medvedev was unimpressed, saying that this was "insufficient explanation", Interfax reported.

"All financial situations are difficult, and Gazprom has many problems as well," he said at a meeting with Gazprom boss Alexei Miller.

Meanwhile Miller has suggested that gas supplies could be cut in proportion with the money owed – potentially exacerbating Belarus’s cashflow problems.

The country profits from its gas transit role, buying up Russian gas at discount rates and selling it on to Europe for a higher price, but Miller warned this trade may be hampered if money was not forthcoming soon.

"In accordance with the contract we have every reason to reduce supplies to Belarus in proportion to the debt to Gazprom," he said.

VOR: Lavrov, Hwan discuss tension between Koreas http://english.ruvr.ru/2010/06/17/9980826.html

Jun 17, 2010 09:53 Moscow Time

Russia’s Foreign Minister Sergei Lavrov had a phone conversation with his South Korean counterpart Yu Myung Hwan on Wednesday. The two ministers discussed the ongoing tensions between the two Koreas caused by the sinking of the Cheonan corvette on 26th of March, which took the lives of 46 sailors. Seoul blames the tragedy on a torpedo launched from the North Korean submarine. Pyongyang denies the allegations. 

Mr. Lavrov and Mr. Hwan also discussed a possibility of putting this issue on the agenda of the next UN Security Council session.  

Xinhua: S. Korean FM calls for Russian support on ship sinking: mediahttp://news.xinhuanet.com/english2010/world/2010-06/17/c_13354151.htm

2010-06-17 10:05:48

SEOUL, June 17 (Xinhua) -- South Korea's top diplomat asked his Russian counterpart for Moscow's support on Seoul's diplomatic efforts to punish the Democratic People's Republic of Korea (DPRK) for the sinking of a South Korean warship, local media reported Thursday citing an unidentified diplomatic source.

South Korean Foreign Minister Yu Myung-hwan called for Russian support in a 20-minute telephone conversation with his Russian counterpart, Sergey Lavrov, according to Seoul's semi-official Yonhap News Agency.

Yu asked for Moscow's "constructive role" in censuring Seoul's wartime rival as Russia's own strategic interests are also related to situations on the Korean peninsula, according to Yonhap.

The news comes at a time when the two warring Koreas are making their contradictory cases at the United Nations Security Council over the sinking of a South Korean warship, which is currently blamed on the DPRK's torpedo attack. Pyongyang has denied its role in the incident and claimed the investigation results were fabricated.

Russia, a veto-wielding permanent member of the Security Council, has remained impartial on the sinking. Russian experts concluded their own separate investigation into the incident on May 31 to reassess the findings of the multinational probe that singled out Pyongyang as a culprit of the sinking that killed 46 sailors, but they have not yet reached a conclusion. 

Editor: Deng Shasha

People’s Daily: Russia, ROK agree to alleviate tensions on Korean Peninsula http://english.peopledaily.com.cn/90001/90777/90853/7027558.html

08:47, June 17, 2010 Russia and the Republic of Korea ( ROK) were determined to alleviate tensions on the Korean Peninsula using diplomatic methods in the interest of peace, the two countries' foreign ministers said on Wednesday.

Sergei Lavrov and Yu Myung-hwan discussed by phone the situation that has evolved after the sinking of an ROK warship and the UN Security Council's consideration of the incident.

"Both sides expressed their commitment to solve the outstanding problems using political and diplomatic means in the interest of strengthening peace and stability on the Korean Peninsula and Northeast Asia as a whole," said a statement from the Russian Foreign Ministry posted on its website.

Tensions on the Korean Peninsula increased after the ROK's Cheonan corvette sank near the disputed Northern Limit Line in the Yellow Sea on March 26, causing the loss of 46 lives.

The ROK said after completing investigations that a submarine of the Democratic People's Republic of Korea (DPRK) fired a torpedo at the vessel. Pyongyang denied the

allegations.

Source: Xinhua

BarentsObserver: China wants Nordic railway linkhttp://www.barentsobserver.com/china-wants-nordic-railway-link.4793851-16175.html

2010-06-17 A railway connection from China, through Russia, the Nordic countries and to the Norwegian port of Narvik might not be far from becoming reality, Swedish Communications Minister Åsa Torstensson maintains.

The railway line is subject for discussion at a two-day transport meeting in Haparanda, northern Sweden, this week. The meeting includes representatives of the Nordic countries, Russia and China, Swedish Radio reports.

-The Chinese want to do business, and that is the background for their big interest in the transport corridor, Leif Zetterberg, State Secretary in the Ministry of Enterprise, Energy and Communications, told the broadcaster.

-This is not necessarily far from becoming reality, Minister Torstensson adds. She confirms that the Chinese Minister of Railways last summer visited Sweden to outline his country’s interest in the project. –He [the minister] was very clear about the huge possibilities with such a connection, Torstensson says.

During that same trip, the Chinese minister visited also Norway and met with Norwegian Minister of Transport Magnhild Meltveit Kleppa. The Norwegian minister after the meeting with the high-ranking Chinese official admitted to NRK that she was thrilled about the plans.

With the route, China would get a quick alternative connection via Haparanda to the Norwegian port of Narvik, where cargo can be reloaded onto vessels for further transport to Island and the USA.

The key condition for the plans is however that Russia endorses the plans and facilitates smooth transport.

Itar-Tass: Medvedev’s visit to the US to cover economic issues, WTO – Dvorkovich

http://www.itar-tass.com/eng/level2.html?NewsID=15234240

17.06.2010, 11.24

MOSCOW, June 17 (Itar-Tass) -- The upcoming visit to the United States of Russia’s President Dmitry Medvedev on June 22-24 at the invitation of Barack Obama will cover issues related to the economy, business projects and Russia’s joining the WTO, the presidential aide, Arkady Dvorkovich, said on Thursday in an interview to Russia’s Vedomosti business daily.

“The main result we are expecting from the visit is more intensive joint work of our companies both in the Russian and other markets on modernisation and, surely, in traditional sectors,” he said.

He commented on Russia’s joining the WTO, saying that “intensive consultations are going on.”

“Over the APEC /Asia-Pacific Economic Cooperation/ ministerial meeting in Japan, Russia’s Minister of Economic Development Elvira Nabiullina had consultations with her counterparts,” Dvorkovich said. “We have achieved serious progress, we have political will, but there are certain disputes, too.”

The main obstacles are well- known: “agriculture, phyto-sanitary measures, cryptography, state enterprises and their impact on competition,” he explained.

“Europeans support us fully, they are interested in our prompt joining the WTO, because the obstacles we have will disappear as we join the Organisation,” Dvorkovich said. “Practically every day I receive letters, though I am not directly involved in this matter, from my American counterparts on various aspects of the talks on the WTO.”

“They are truly involved in the solving of the issues, which has not been seen for several years” he said.

VOR: The Duma to debate on the new STARThttp://english.ruvr.ru/2010/06/17/9979802.html

Jun 17, 2010 09:43 Moscow Time

The Russian State Duma`s Committees on Defense and Foreign Affairs are holding a joint session on Thursday to discuss a new Russia-US nuclear arms control treaty. The deal was submitted to the parliament by the President Dmitry Medvedev in late May. The Russian leader called on the deputies to ratify the treaty no later than their partners in the US.

The Presidents of Russia and the US signed a new nuclear arms control treaty in Prague on 8th April.

Moscow News: No rush for new STARThttp://www.mn.ru/politics/20100617/187877201.html

Source Andy Potts at 17/06/2010

Russia's Duma will not hold a special summer session simply to rubber-stamp the new missile treaty with the USA, speaker Boris Gryzlov said on Thursday.

Although there will not be time to debate the deal struck by presidents Dmitry Medvedev and Barack Obama before the summer recess, Gryzlov dismissed suggestions of holding an extra session, RIA Novosti reported.

Ratification, which is expected to be at the same time as US senators approve the treaty, is now scheduled for discussion during the autumn session which begins in September.

Reuters: US missile defense chief: START won't limit planshttp://in.reuters.com/article/idINN1614529920100616

Thu Jun 17, 2010 12:58am IST

* Supermajority of 67 needed for Senate passage

* Some Republicans concerned about giveaways to Russia

* Cuts leave both sides able to annihilate one another

By Susan Cornwell

WASHINGTON, June 16 (Reuters) - The chief of the Pentagon's Missile Defense Agency assured U.S. lawmakers on Wednesday that the new treaty with Moscow cutting nuclear arms does not limit Washington's missile defense plans, as the Obama administration sought to convince treaty skeptics in Congress.

Winning over Republicans who are among the most stalwart supporters of U.S. missile defense programs is critical to getting Senate approval of the new START treaty that President Barack Obama and Russian President Dmitry Medvedev signed in April.

A Senate supermajority of 67 votes is needed for ratification and the Obama administration hopes for a vote this year.

"There are no limitations in the treaty that affect our plans for developing missile defense," Lieutenant General Patrick O'Reilly, director of the Missile Defense Agency, told the Senate Foreign Relations Committee.

The pact reduces the strategic nuclear arsenals of both countries. Obama administration officials repeatedly have declared it does not cut defensive systems that Washington is developing with the goal of protecting against a small number of missiles that might be fired by "rogue" states such as North Korea or Iran.

But some Republicans already skeptical of Obama's attempts to "reset" relations with Russia and his revamping last year of the Bush administration's missile defense program, keep looking for possible concessions his administration may be making to Moscow.

They have pointed to a clause in the new START that prohibits the conversion of long-range missile launchers into missile defense launchers. Republican Senator James Risch asked Wednesday whether this is not a constraint.

O'Reilly replied that the clause was nothing to worry about because the actions it prohibits were not planned anyway.

While the United States did five such launcher conversions back in 2002, no more were planned, he said. This was because officials had learned it is cheaper to build launchers, and easier to maintain them, than converting old ones.

"The options that are prohibited would be ones that we would not choose," O'Reilly said.

The new START pact commits the two countries with 95 percent of the world's nuclear weapons to significant cuts in their strategic arsenals, although still leaving them with more than enough firepower to annihilate each other.

O'Reilly's appearance with two other Pentagon officials came a day after the treaty's chief U.S. negotiator told lawmakers that there were no secret deals to limit missile defense made with Moscow during talks on the pact.

(Editing by Eric Walsh)

RIA: Senior U.S. diplomat praises improved relations with Russia http://en.rian.ru/world/20100617/159455110.html

02:35 17/06/2010

The United States is satisfied with the recent progress in the relations with Russia and hopes to continue productive bilateral dialogue on many issues, a senior U.S. State Department official said.

"I have to say there is a contrast with our ability to cooperate with Russia not just two or three years ago but even a year ago," said Philip Gordon, Assistant Secretary of State for European and Eurasian Affairs.

Speaking at the German Marshall Fund in Washington on Wednesday, Gordon said that Russia's vote in the UN Security Council in support of a new set of sanctions against Iran clearly showed that Moscow and Washington could effectively cooperate in global affairs.

"We have a common interest in dealing with Iran's nuclear program - we think Russia shares that interest," he said, adding that both countries were willing to broaden the range of issues of common interest.

Russia and the United States have been following the route of "resetting" their relations and ridding them of Cold War-era holdbacks since Russian President Dmitry Medvedev and his U.S. counterpart Barack Obama announced the new policy of bilateral ties last year.

Russia and the United States signed a new strategic arms reduction treaty in Prague on April 8. The new START treaty replaced the 1991 pact that expired in December and is expected to bring Moscow and Washington to a new level of cooperation in the field of nuclear disarmament and arms control.

The U.S. diplomat said now is the best time to resolve the remaining controversial issues in bilateral relations and eliminate all possible misunderstanding in the dialogue between the two countries.

The Russian president is expected to visit the United States on June 22-24 to boost Russian-U.S. cooperation in various spheres, including trade and the high-tech industry.

WASHINGTON, June 17 (RIA Novosti)

ST. PETERSBURG ECONOMIC FORUM

June 17, 2010 10:37

Interfax: St. Petersburg economic forum to start Thursdayhttp://www.interfax.com/newsinf.asp?id=171332

MOSCOW. June 17 (Interfax) - The 14th International Economic Forum that is to take place in St. Petersburg on June 17-19 will gather leading business people and policymakers from Russia and around the world.

This year, the forum will start with a series of business dialogues between Russia and the EU, Russia and the U.S., Russia and India, and Russia and the CIS.

The forum will be officially opened on June 18, and Russian President Dmitry Medvedev will speak at the opening ceremony. A number of parallel sessions will be held the same day, the most important of them dealing with the financial market in the post-crisis period and the future of the natural gas market.

This year will see for the first time a session dealing with military-technological cooperation and a number of sessions concerning various economic fields, among them tourism, construction, and energy. Other sessions will also deal with pension programs and the labor market.

va mj

VOR: Saint Petersburg hosts 14th International Economic Forumhttp://english.ruvr.ru/2010/06/17/9979323.html

Jun 17, 2010 09:39 Moscow TimeThe 14th International Economic Forum opens in Saint Petersburg today. Economic modernization is among the top issues on the agenda. Some 10,000 people, including some state leaders, top businessmen and ministers, are participating in a 2-day forum to discuss possible solutions to the global financial crisis. The Presidents of Russia and France, Dmitry Medvedev and Nicolas Sarkozy, are expected to address the forum as part of the ‘Revising global development’ conference.

VOR: Economic Forum to open in St. Petersburghttp://english.ruvr.ru/2010/06/17/9974832.html

Jun 17, 2010 03:03 Moscow TimeJune 17th will see the opening of this year’s Economic Forum in St. Petersburg.   Officially titled “Laying Foundation for the Future”, the forum will focus on the most crucial financial issues of the evolving markets, Russia included.   The even will gather around 2300 participants from 52 countries, among them 69 heads of foreign and 74 heads of Russian companies. Many of the companies taking part in the forum are listed in the top Forbes ratings.  The forum will end on June 19th.     

Page last updated at 23:01 GMT, Wednesday, 16 June 2010 00:01 UK

BBC: Russian economic forum to promote new reform policieshttp://news.bbc.co.uk/2/hi/business/10330736.stm

By Konstantin RozhnovBusiness reporter, BBC News

St Petersburg International Economic Forum, which starts on Thursday, will be used by Russian officials to promote the Kremlin's push to modernise the country's economy.

European leaders and heads of international companies are among the guests of the three-day annual event.

French President Nicolas Sarkozy will be giving a speech.

As part of the forum, Russian President Dmitry Medvedev will host special sessions to discuss economic modernisation and the creation of Russia's "Silicon Valley".

Mr Medvedev's modernisation reform policies and the way they have been aggressively promoted by the government remind many of "Perestroika", Soviet leader Mikhail Gorbachev's drive to restructure the Soviet economy and society during the second half of the 1980s.

The USSR economy needed a completely new approach to become more effective, which meant modifying and even abandoning strict total central planning, the centre core of its economic policies.

Russia now faces an equally revolutionary task of diversifying its economy, heavily dependent on oil and gas export, to be able to maintain its fast pre-crisis growth in the years ahead.

Sergey Aleksashenko, director of Macroeconomic Research at the Higher School of Economics in Moscow, says that the forum is a political PR event, used by the Russian government to promote modernisation as well as the country's political system.

"However, it does not mean it is a bad thing," he points out.

"For years, Russia had problems with external political and economic PR, and now things are changing."

Stefan Meister, an expert on Russia at the German Council on Foreign Relations (DGAP), believes that while the forum was started as a platform for the Russian government "to promote its topics", the event is now internationally recognised by foreign businesses as well.

The forum gives them an opportunity to get direct access to the Russian political elite, an essential step towards doing business successfully in bureaucratic Russia.

The country is often named as one of the most promising markets for investment, thanks partly to the relative macroeconomic stability and political predictability achieved by the Kremlin in recent years.

As a result, many foreign firms are eager to cement their presence in Russia.

Chief executives and top managers of Siemens, Citigroup, DuPont, ConocoPhillips, Deutsche Bank and GDF Suez are listed among the forum's guests.

'Real problems'

Despite all the potential advantages of investing in Russia, there are a number of serious problems in the country's economic climate, including corruption and a loose interpretation of the law by some officials.

"As you listen to Russian officials and businessmen discuss potential gold mines in investing in Russia, be mindful that there are numerous land mines as well," warned Pavel Ivlev, a former lawyer with the collapsed Russian oil company Yukos, in an e-mail last week.

However, Mr Aleksashenko does not think that "real problems", as he calls them, will be seriously discussed at the forum.

"We will not hear anything new in this regard," he says.

Only in 2007 did the St Petersburg event truly become Russia's main international economic forum, after top Russian officials and state companies for the first time ignored the privately organised Russian Economic Forum in London, effectively depriving the London event of its leading status.

The move, unexpected but not surprising, was seen as the Kremlin's decision to start promoting its "home-grown" St Petersburg forum.

Mr Meister believes that one of the reason Russia organises the St Petersburg forum is because it simply "wants to have an internationally recognised forum".

Judging by the list of participants, this aim has been achieved.

The question is whether the event will be just another purely PR move by the Russian government, and whether it will really help Russia push its modernisation plans forward.

RIA: MTS to present iPad analogue at St. Petersburg forum http://en.rian.ru/russia/20100617/159457372.html

11:06 17/06/2010

MOSCOW, June 17 (RIA Novosti) - Russia's leading mobile operator MTS will present a prototype of its tablet PC at the St. Petersburg International Economic Forum on June 19, a Russian business daily said on Thursday.

Kommersant said that while MTS's tablet computer, based on the Android 19 operating system, will be no match for the much-hyped Apple iPad, the odds are it will outdo the iPad on the Russian market.

With the expected sales of 500,000 devices per year, MTS will sell twice as many tablets as Apple in Russia.

MTS's tablet has a 7-inch (17.78 cm) touch screen, Wi-Fi and 3G access. It will come with a built-in MTS 360 platform, comprising social networks, e-mail services, mobile applications and navigation systems.

The tablet will only work with an MTS SIM-card.

A source close to MTS said the firm is currently in talks with two Taiwanese contract electronics makers, iPhone manufacturer Foxconn and Asus subsidiary Pegatron, over the development and production of the tablets.

The companies have yet to comment on the proposal.

MTS's press service said the device may go on sale in late 2010. It did not disclose the price of the device. Currently, the Apple iPad costs between $499 and $829 in the United States, depending on technical features, but experts say MTS's device will be cheaper, in the neighborhood of 10-12,000 rubles, or $325-390.

Russia's other large mobile phone operators, Vimpelkom and Megafon, are expected to present their tablet PCs later this year.

Moscow Times: Sailing Toward Soviet Stagnation http://www.themoscowtimes.com/opinion/article/sailing-toward-soviet-stagnation/408447.html

17 June 2010By Sergei Guriev

In recent years, the St. Petersburg International Economic Forum has become a major event in Russian business and political life. The forum is the meeting point for global CEOs and policymakers with an interest in Russia. It is also the place for the key speeches of Russia’s top leaders, including the president and ministers.

But the St. Petersburg forum is more than just a meeting place. Since it is an annual event, we can look back to the previous year’s forum and check the difference between what was on leaders’ minds back then and what is relevant now.

Even this year’s agenda shows that Russia is now less preoccupied with the crisis and more interested in longer-term issues. Last year’s mood of uncertainty has been replaced by the understanding that, crisis or not, Russia is facing serious structural challenges. The country has to vastly improve governance, create incentives for raising productivity through innovation and investment, build modern infrastructure, integrate better into the global economy and make every industry and region more competitive. Two years ago, these challenges were already clearly recognized by both the government and business leaders. This year, forum participants will probably reflect what progress has been made since then.

One other important takeaway from the 2009 forum was a survey of global oil company executives taken during Deputy Prime Minister Igor Sechin’s session “The Price of Oil.” When asked to predict the price of oil for the year to come, the majority selected a range of $70 to $80 per barrel. Looking back, their forecast turned out to be amazingly accurate. What’s more, this range seems to be sustainable for the medium term.

This prediction has affected public debate in an unexpected way. The last time the price of oil remained in the $70 to $80 per barrel range for an extended period was in the late 1970s and early 1980s. This has led to the idea of the “70 to 80 scenario,” which holds that if the price of oil stays in this range, Russia will start to resemble the Soviet Union of the 1970s and 1980s, which was marked by the complacency and inertia of the country’s leaders, domination of the state in economic and social life, and lack of competition and change. In the last year, comparisons between Vladimir Putin’s Russia today and Leonid Brezhnev’s Soviet Union have become commonplace.

At the same time, we must not overlook important differences that create strong incentives for modernization. First, Soviet leaders were less competent in macroeconomics. Today, Russia has no sovereign debt and still has a substantial sovereign fund. Second, Soviet leaders did not imagine that the Soviet Union could fall apart. The current Russian leadership lived through the collapse of the country and understand very well that stagnation is a dead end. Third, Russia is no longer isolated — its elites and upper middle class know the world outside of Russia through travel and the Internet.

But we haven’t yet seen the changes the country badly needs. There is a strong promodernization rhetoric, but this hasn’t been translated into concrete action. Moreover, as the very same government has been running the country for 10 years and has not delivered on quite a few promises before, the public’s confidence in the government’s words and promises is decreasing. Ten years ago, the government published the “2010 Strategy” of comprehensive reforms, also known as “The Gref Program.” According to a recent report by the Center for Strategic Research, only 36 percent of this strategy has been implemented.

Moreover, the government’s role in the economy is growing, not shrinking, thus bringing Russia closer to the Soviet model. The crisis is over, but the government’s expenditures keep increasing. After running a decade of budget surpluses, Russia is now projecting for 2010 a budget deficit of between 5 and 6 percent of gross domestic product. Moreover, it is likely that we will see even more government expenditures in 2011 and 2012 as a part of the election campaign.

Unsustainable macroeconomic policy is what eventually caused the Soviet Union to go bankrupt. To keep the people from revolting, the government threw more and more money at the country’s problems instead of undertaking painful reforms and restructuring. The Soviet debt grew so large in the 1980s that lenders decided not to offer the country any more loans.

Given that Russia today has large reserves and low debt, it is hard to imagine that the country would repeat the fate of the Soviet Union. At the same time however, just 3 years ago it would have been unthinkable that Russian government budget could run a deficit with oil at $70 to $80 per barrel. Moreover, as deficits in the country’s pension system are expected to increase sharply over the next 10 years, Russia may have very serious solvency problems by 2020.

Russia will have to reform, privatize, deregulate and open up to competition sooner or later. Hopefully, the leading experts at the St. Petersburg Economic Forum will reach a consensus that we should learn from the fate of the Soviet Union and reform before the cash runs out.

Sergei Guriev is rector of the New Economic School in Moscow.

Russia Today: Leaders of tomorrow in St Petersburghttp://rt.com/Business/2010-06-17/leaders-tomorrow-st-petersburg.html/print

17 June, 2010, 09:22

Young business people have been getting together in St Petersburg to swap ideas at the International youth economic forum.

For these young go-getting business people it’s all about innovation and modernization. New Media Manager Alyona Popova says she believes in the crowdsourcing model, where assignments are sent out to videomakers which are then syndicated online – a marketing tool of the contemporary age.

“I believe in crowdsourcing model, you know. I believe that we will work with foreign experts and create a future ideas and internet sphere. I believe in it because this is the future.”

Aleksandr Debelov, CEO of Crelligence Media, which has created a filmmaker community and posts selected videos to a range of blogs, social media sites, and online

audience venues, is excited about the diminishing timeframe needed to make a billion dollar company.

“Twenty years ago when it took a hundred years to build up a billion dollar company – today you can do it in five years. And in the future I believe you can do it in one or two.”

Venture capitalists, hi-tech entrepreneurs, media project managers – the oldest is no more then 30 years old. But there are older and wiser heads present, to reign in some of the excesses of youthful exuberance. There, to offer advice and to discuss the future of business in Russia and beyond was John Pepper -chairman of board of Walt Disney. He says that the young Russians are similar to their counterparts in the US but with more determination.

“The number who came up to me afterwards – I wasn't a bit surprised at that. Now would that happen in the US? Yes, but even more here, that people would be coming up, wanting to learn the ideas. And then once into something, I've seen to a greater degree, generalising a sense of dogged determination to make something happen.”

Unfortunately these youngsters are not the norm for Russian youth. According to a recent survey, 90% of young people in this country would like to work in big state corporations and in banks rather than start up their own company. They look to others to break new ground.

Less sceptical than older businessmen – these young entrepreneurs genuinely believe in the Russian government’s initiative to innovate and modernise the Russian economy. Maybe they will be part of the first Russian generation who have initial hopes of capitalist success that do not end in disappointment.

Panorama.am: President Serzh Sargsyan travels to St. Petersburghttp://www.panorama.am/en/politics/2010/06/17/serzh-sargsyan-peterburg/Thursday, June 17

Armenian President Serzh Sargsyan is due traveling to Saint Petersburg at the invitation of Dmitry Medvedev of Russia to attend the international economic conference. President Serzh Sargsyan will stay in St Petersburg until June 19, President’s press service reported.

In the scopes of the conference a trilateral meeting among the Presidents of Armenia, Russia and Azerbaijan will take place.  

Serzh Sargsyan will as well attend the festive celebrations of 300th jubilee of Armenian community. President will visit Saltikov-Shchedrin national library and will attend the official opening of Armenian manuscripts and ancient print books exhibition.

Source: Panorama.am

News.az: Moscow, Ankara compete to consolidate positions in Karabakh peace processhttp://www.news.az/articles/17577

Thu 17 June 2010 | 05:34 GMT

Any breakthrough should not be expected in the Karabakh peace process.

A Sargsyan-Medvedev-Aliyev meeting in St. Petersburg is one of the regular meetings and any breakthrough should not be expected in the Karabakh peace process, Manvel Sargsyan, an expert of the Armenian Center for National and International Studies, said.

“As the OSCE Minsk Group does not display activities in organizing meetings between the parties, and Azerbaijani President Ilham Aliyev continually threatens to walk out of the talks, Moscow decided to take the initiative and use this opportunity (in St Petersburg, on the sidelines of the International Economic Forum) to bring them together”, the expert noted.

He stressed Moscow and Ankara are now competing to consolidate their positions on the Karbakh peace process.

News.am

RIA: Kaczynski hopes for bright future of Polish-Russian relations http://en.rian.ru/world/20100617/159455778.html

05:05 17/06/2010

Jaroslaw Kaczynski, a candidate to succeed his brother as Polish president, expressed hope that relations between Warsaw and Moscow would gradually evolve into a mutually-beneficial partnership.

Russian-Polish relations improved in recent months as a result of the sympathy Russia showed over the death of Polish President Lech Kaczynski in a plane accident near the western Russian city of Smolensk.

"I hope that these relations will enter a phase of normal contacts, and later transform into mutually-beneficial relations," Kaczynski, who is the leader the leader of Poland's Law and Justice Party, said in an interview with RIA Novosti on Wednesday.

"If both our peoples could understand each other and come to a common denominator - seriously and with a long-term perspective - it would serve the strengthening of ties on all levels, including the political and economic levels and the cultural exchange," he said.

According to a recent survey, Kaczynski and acting president Bronislaw Komorowski are the favorites to win the race for Polish presidency.

The first round of polls is scheduled on June 20, and if no candidate receives the required 50% plus of the national vote, a second round between the two top candidates will take place on July 4.

While Kaczynski built his career on anti-Russian rhetoric and ferreting out Russian "sleeper agents," he also penned a video address to the Russian people following the death of his brother, thanking them "for every tear shed, every candle lit, for every word of comfort."

Kaczynski said on Wednesday Russia would be among the first countries he would like to visit if he is elected as Polish president.

WARSAW, June 17 (RIA Novosti)

UKZAMBIANS: Zambian student remains arrive

http://ukzambians.co.uk/index.php?option=com_content&view=article&id=3255:zambian-student-remains-arrive&catid=15:home-news&Itemid=906

Thursday, 17 June 2010 05:11

The long awaited remains of Lance Mate a Zambian student who died under suspicious circumstances in Russia last November have finally arrived in the country.The atmosphere at Lusaka International airport was solemn as Mates heart broken mother cried uncontrollably.

Mate who had gone to Russia in pursuit of an engineering Degree today comes back as a cargo aboard a South African Airways plane which touched down at the Lusaka International Airport at 13:05 hours local time.

The Zambian student died in Russia in mysterious circumstances at Kazan State University.

He went missing on November 6, 2009 after a quarrel with a group of Russians and his body was found in the Kazanka River in Kazan City.Meanwhile, the Mate finally has announced that burial will take place on Thursday June

17, 2010 at the Old Leopards Hill cemetery in Lusaka.

Russian Ambassador to Zambia, Boris Malakhov, has since regretted the death of Mate.

He, however, underplayed racism against African students in Russia and said all foreign students are safe in Russia and such cases were very rare.

Zambians in Kazan Students Union (ZAKASU) criticised the Zambian Embassy in that Russia over the manner in which authorities were handling students’ affairs.

In a letter of protest to the Embassy, the students complained that the embassy had distanced itself from the problems being faced by the students.

The students alleged that the Zambian authorities in that country had been unsupportive and were quick to distance themselves from circumstances leading to Lance’s death.

“We hope that in future the Embassy will be more supportive of those who are part of their community. The Embassy’s failure to issue correct statements has undoubtedly injured its reputation and the authorities have an obligation to correct the misconception that has been created,” stated the students.

RUSSIA-KYRGYZSTAN

RIA: Death toll in Kyrgyz ethnic clashes close to 2,000 - source http://en.rian.ru/exsoviet/20100617/159457824.html11:37 17/06/2010

The real death toll from interethnic clashes in southern Kyrgyzstan has exceeded 1,800, nearly 10 times higher than the official figures, a secret service source said on Thursday.

The source said in a telephone conversation with RIA Novosti that the striking difference from official figures could be explained by "objective reasons."

"Firstly, following local customs, many families bury their dead on the first day, before the sunset. Secondly, because of the collapse of local administrative bodies there is no one to report on casualties. Moreover, in some places the entire families died in the clashes and no one could report on their deaths," the source explained.

Latest official reports put the death toll at 191, with over 2,000 injured. However, interim president Rosa Otunbayeva had repeatedly said the figure could be way higher.

The deadly clashes between ethnic Kyrgyz and Uzbek groups in southern Kyrgyzstan broke out in the city of Osh on June 11 and then spread to the neighboring Jalalabad region.

Foreign countries, including Russia, Germany, China and Pakistan continue to send humanitarian aid to the former Soviet republic in Central Asia.

The United States expressed its concern over the situation in Kyrgyzstan and said on Wednesday it had committed over $32 million in response to the current humanitarian crisis in Kyrgyzstan and Uzbekistan.

MOSCOW, June 17 (RIA Novosti)

Trend.az: From the south of Kyrgyzstan evacuated 180 citizens of Russia - Consul

http://ru.trend.az/regions/world/russia/1706043.html

GOOGLE TRANSLATION

17/06/2010 13:02 One hundred eighty-Russian citizens evacuated from the south of Kyrgyzstan since the beginning of the eruption there on June 11 inter-ethnic conflict, the nature of the requests for mass evacuation of Russian compatriots there, said on Thursday, the consul of Russia in the city of Osh, Yuri Burov, writes RIA Novosti.

In the "southern capital" of Kyrgyzstan Osh and the regional center of Jalal-Abad occurred ethnic clashes between Kyrgyz and Uzbeks. During a week in areas of unrest, there were riots and arson homes, looters rampaged. The authorities have introduced a number of regions of Osh and Jalal-Abad, a neighboring area of emergency and announced a partial mobilization of conscripts. According to latest official figures, the events on the south killed 191 people.

According to the Russian consulate in Osh, all in the southern region of the republic lived about 1600 citizens of Russia and more than 25,000 Russian-speaking citizens of Kyrgyzstan (most of whom - Russian, Tatars and Ukrainians).

"There have been requests from Russian citizens to assist in the departure from Osh, mostly Russian citizens, who are grandparents and they came to visit for fruits and vegetables to rest for the summer. There are also travel" - said the consul.

No requests mass nature of the evacuation of Russian compatriots living in southern Kyrgyzstan, according to the Russian diplomat, no.

"Such a fuss to always evacuate from here, no. Understandably, the tragedy that occurred in significantly complicate life, but people here were born, grew up, they have family here and they do not want to leave" - Burov said.

The diplomat also noted that Russian compatriots appear in the region "even a certain

stabilizing factor."

"They can and they play a conciliatory role between the parties to the conflict, because they enjoy the prestige and some well-deserved respect among those ages as well as other parties to the conflict" - Burov said.

With regard to victims and victims among Russian citizens, then, according to Boorowa, according to official figures, there are none.

However, Burov said that the consulate has received several calls from news of the death of three Russians.

"We made a formal request and wait for an answer now. These people could accidentally being shot" - he said.

VOR: Russian planes deliver aid to Kyrgyzstanhttp://english.ruvr.ru/2010/06/17/9984139.html

Jun 17, 2010 10:37 Moscow TimeThe planes of the Russian Emergency Ministry have delivered about 130 tons of humanitarian aid to Kyrgyzstan. According to the information of international organizations, more than 200,000 people of different ethnicities left the republic after the tragic events in the city of Osh where about 200 people were killed in the ethnic clashes. The interim government blames the supporters of the ex-president Kuramnbek Bakiyev in organizing the clashes.

Russia Today: Kyrgyz violence – allegations of genocidehttp://rt.com/Top_News/2010-06-17/kyrgyz-uzbek-refugees-osh.html/print

17 June, 2010, 09:24

Mourning for those killed in ethnic violence in the south of Kyrgyzstan continues, while the country’s authorities have admitted the real number of dead is much greater than the official toll of 191.

The clashes between the Uzbek minority and the Kyrgyz majority started on Friday in city of Osh, and later spread to regional center Jalal-Abad.

The interim Kyrgyz government has deployed troops with the right to shoot to kill in order to restore order in the region.

Russia, along with other countries and international organizations, has been sending aid to the country, but the situation there is still critical.

Russian Foreign Minister Sergey Lavrov promised that Russia will do everything within its power to help refugees and help Kyrgyz government to find those responsible for the violence.

“The Collective Security Treaty Organization is already helping Kyrgyzstan. The organization's secretaries held an urgent meeting in Moscow where they decided to provide assistance to Kyrgyz police to stabilize the situation in the country. The CSTO will also help the country to identify those behind the violence,” the Russian FM announced.

The refugee camps in Uzbekistan are overwhelmed, and aid agencies are warning basic supplies are running out, despite the fact that more and more help and humanitarian planes with basic products are arriving. Russia has already sent six cargo planes with essentials, but despite all the help arriving, it is far from being enough.

The UN says some 200,000 people have fled their homes, with nearly half pouring across the border to neighboring Uzbekistan, where they are being housed in about 75 refugee camps. The Uzbek authorities never expected that many refugees and the camps are now full to bursting point.

The Kyrgyz-Uzbek border was closed for a short period of time, but then was re-opened and now the flow of refugees – women with children most of them – continue to cross the border.

In southern Kyrgyzstan there are “SOS” inscriptions on the walls on every street in neighborhoods, but these led to even more violence.

“We did not have anything to protect ourselves with, so we had to write ‘SOS’ everywhere, but it did not help at all. Places where Uzbeks live all have ‘SOS’ signs – that is how they identified us,” remembers local Uzbek resident.

Shockingly enough, Kyrgyz neighbors were set on brutally exterminating Uzbek ones.

Wednesday was the first of the three days of national mourning.

“We would never distinguish between the Kyrgyz and Uzbeks. All of us are Muslims. Why are they not afraid? Don’t they have children? Don’t they have fathers and mothers? Why so relentless? What do they want?” cried one of the local women.

People have now blocked all the roads in and out of the Uzbek villages, using trucks for barricades.

Women and children fled to the border with Uzbekistan. Many were unable to cross it.

Many children have been separated from their parents.

Pregnant women are now running the risk of miscarriage due to the stress and strain of the last several days.

Although the official death toll is approaching 200, many believe the real figure is many times more. Allegations of genocide have been leveled.

Refugees insist that the international community must stop financing the Kyrgyz government, because they set houses, hospitals and mosques on fire deliberately to get aid money.

Now, even Kyrgyz human rights activists are coming to Uzbek refugee camps to talk to the people.

However, the words are yet to be backed by actions. Many people – Uzbek by ethnicity, Kyrgyz by passport – who have fled their homes still have nothing to eat and nowhere to go.

They do not feel particularly welcomed by either side of the border. They are too afraid to return to their old torched homes, but have neither the resources nor the places to build new ones.

Russia Today: Cases of cash paid for Kyrgyz unrest – former presidenthttp://rt.com/Politics/2010-06-17/former-kyrgyz-president-akayev.html/print

17 June, 2010, 10:50

Criminals and unemployed youths were paid in suitcases of cash to start bashing people up and set everything on fire, shared Askar Akayev, the country's president from 1990 to 2005, with RT.

RT: What proof is there that your successor Kurmanbek Bakiyev is provoking a civil war between north and south Kyrgyzstan?

Askar Akayev: There are numerous pieces of evidence that the two brothers – Ahmad and Janysh Bakiyev – are now in the south of Kyrgyzstan. There are numerous pieces of evidence that they have paid criminals for the provocations that have led to this fratricidal conflict between the Kyrgyz and the Uzbeks. You may remember that immediately after his overthrow, Bakiyev, who was staying in his home village in the south, called on his compatriots – southerners – to fight against the north. But he received no support from his compatriots in the south.

I am convinced that Bakiyev’s supporters are responsible for the interethnic division. This has been proved by the shooting of Black Aibek, a criminal boss, an Uzbek, in the

south, who was working for the Bakiyevs. This happened in Jalal-Abad a couple of weeks ago. This is further proof of the involvement of the Bakiyevs in the provocations that have led to the current fratricidal war.

RT: Are you saying Bakiyev’s family is using its resources, its money to foment revolution?

AA: Absolutely so. It’s a well-known fact that when the April revolution broke out, the Bakiyevs carried away all the cash resources from banks and from the finance ministry. They took them to the south of Kyrgyzstan. And now they are using these resources. And they are paying not for the provocations using criminals alone. My friends gave me a call from Osh. They said that a couple of days before the bloodshed in Osh, they felt something was wrong and stayed at home having closed all the doors, because cash was being handed out to the unemployed youth in suitcases. In other words, they were giving money to the young to stir them up. Sadly, that was the case.

RT: What was the going rate for a protestor?

AA: I don’t have the figures, but you know, for our struggling region – the average salary in Kyrgyzstan is less than US$100 [per month]. $100 is enough for a person to start bashing people up and setting everything on fire.

RT: An investigation set up by your successor Kurmanbek Bakiyev said that you were not personally responsible for any corruption, but for example it was said that two thirds of the revenues went not to the state budget but to members of your family. Was there any corruption during your presidency?

AA: You know, saying that there was no corruption in the days of my rule would be inappropriate. Corruption has always existed. And it is likely to be always the case in the future, but a successful state definitely keeps corruption to a minimum. We were also fighting corruption, and I can’t say we were a great success. But we were fighting it. To compare the corruption levels, I would like to share the opinion of the current deputy head of the interim government, Mr. Beknazarov. He is a robust opponent of mine, so you may trust him. He was one of those who organized the coup of 2005. This is what he said about the situation in the country: “the corruption level we are facing today could not have even been thought of in the time of Akayev’s rule.” This has been said by the closest associate of Bakiyev and a vehement opponent of mine. So, you can see that corruption has spread greatly over the past five years. Corruption brought money into the pockets of one single family – that of the Bakiyevs. It’s no secret that the son of Bakiyev, Maxim Bakiyev took control over all the state budget and reserve funds of Kyrgyzstan, having set up an investment and resources agency. This is a well-known fact. The Russian loan of US$300 million given out last year has been spent on the international markets. As you know, Maxim Bakiyev is now wanted by Italian investigators, together with his American associate Yevgeniy Gurevich who managed to get billions of dollars out of Italy with the help of the $300 million via the set up agency.

RT: Do you agree that the violence is escalating, as international agencies in Kyrgyzstan say, and how could this escalation of violence be stopped?

AA: Indeed, the past two days have been quiet. This makes me glad of course, but I don’t think the interim government is completely in control of the situation. The interethnic conflict might flare up again; it would only take one “match”. I think there was a good reason for the interim government to request peacekeepers from Russia and the CSTO states.

Our priority task right now should be to extinguish this flame of enmity. It is very likely that we will need CSTO peacekeepers to do that. After that is done the country has to do everything it can to find a way out of the situation. Nobody will do that for us. It is very important to stop the bloodshed, prevent the conflict from escalating. But once this is done we will face the difficult task of reconciliation. We need to build trust. It is still too early to talk about consent in the society. We have to resolve our social problems first. Winter is coming in six months and winter is harsh in our region. Two cities – Osh and Jalal-Abad – have been burned down. We will need humanitarian and financial aid to rebuild houses so people will have electricity and a roof over their head in winter. It would be impossible to resolve the other problems without that.

So Kyrgyzstan is facing a very hard task. I’d like to take my chance to address the world community and tell them that Kyrgyzstan is in trouble and needs aid.

RT: What will happen to the strategic Manas airbase in Kyrgyzstan, which both Russia and America are interested in using as a supply base for the war in Afghanistan?

AA: The US base in Manas was opened during my presidential term. I think the US acted as a true world leader when former president Bush had addressed the world community with a call to form an anti-terrorist coalition. They gained global support and we thought Kyrgyzstan had to make a contribution. Kyrgyzstan also had a problem with Afghan armed groups in 1999. That was why we allowed the US to use the Manas airport. I’d like to stress that it was not done on a monetary basis. The US never paid for the use of that base during my term in office. They paid for navigation services. The airport is furnished with cutting-edge navigation equipment made by the French company, Thomson. The services provided were the same as would be in any international airport: takeoff and landing guidance etc. I’m saying this to the people who accuse me and my family of corruption. You can check: the US never paid a cent for using the base.

We viewed it as Kyrgyzstan’s contribution to the global battle against terrorism. It was in our interests. It was President Bakiyev who started the trade negotiations. Some people say that Moscow was involved in this matter. They call it “the hand of Moscow”. There is no “hand of Moscow”. I remember it from my term in office. No one ever mentioned such a thing. There was the US base and the Russian base in Kant. There was no antagonism and no problems. Then Bakiyev came and started bargaining. The US generals put it right: Bakiyev’s policy was similar to what one would do at an Asian bazaar. I think it was his fault that the US and Russia’s interests collided over the bases.

He wanted to get more money from both Russia and the US. He tried to intimidate Washington, threatening to shut down the base. They paid him more. Indeed, they started paying during Bakiyev’s term. I think all that money went to his clan.

The base was free of charge during my term in office. Look it up. So of course I am offended when people say I was corrupt just like Bakiyev. The base will work for as long as Afghanistan poses a terrorist threat. So I welcome the interim government’s decision to honor Kyrgyzstan’s international agreements. If the government doesn’t conduct the same marketplace policy – because it is made up of the people who brought Bakiyev to power five years ago – then everything will be fine and I’m sure there will be no argument between Russia and the US over the bases. The Russian political scientist, Professor Knyazev, described Bakiyev’s policy very well when he said Bakiyev was ready to dance for anyone for a penny. The penny in this case would be a $100 million from the US and $500 million from Russia for a promise to close the base. This was one of the reasons for his political downfall, I think. He was hated by his own people for being authoritarian and aspiring to become a Khan. On the other hand, the world community turned its back on him for cheating. Things like that are not tolerated in international politics.

June 16, 2010Russia Profile: Kyrgyzstan: a Perfect Stormhttp://www.russiaprofile.org/page.php?pageid=International&articleid=a1276705699

By Roland OliphantRussia Profile

Are Malignant Forces Trying to Harness a Perfect Storm of Political Instability, Economic Hardship and Ethnic Tension?

After a week of brutal violence in southern Kyrgyzstan, the official death toll in the southern cities of Jalalabad and Osh stands at 187, but is expected to rise. By Wednesday morning the Kyrgyz Health Ministry said that at least 1,870 had been injured. The Uzbek government says it has registered some 75,000 refugees, many of whom are in need of shelter and assistance. The situation now seems to have calmed, as Russian government aid plans have started to arrive in Bishkek.

While the situation in Osh and other cities appeared to calm overnight, the UN has identified a “critical” need for food, water, healthcare and protection for internally displaced persons, as well as security for thousands who are still too afraid to leave their homes. To make matters worse, the Osh water authorities have told UNICEF that they cannot access the city’s main water treatment plant because local residents have barricaded the district it is located in, threatening a potentially devastating release of untreated sewage into the Ak Buura river, which flows into Uzbekistan.

The border region where the violence broke out lies in the Ferghana valley, a fertile but poverty-stricken region split between Tajikistan, Uzbekistan and Kyrgyzstan that has long been considered a potential trouble spot for a number of reasons. “It’s wrong to imply that the Kyrgyz and Uzbeks have just been waiting for the opportunity to start slaughtering each other,” said Cai Wilkinson, a Kyrgyzstan expert at the University of Birmingham. “Effectively we’ve ended up with a perfect storm of events: political upheaval, extremely bad economic circumstances and in the southern half of the country there are far fewer opportunities and a greater general sense of hopelessness.”

But as attention turns to the cause of the violence that erupted in Osh on the evening of Thursday, June 10, a picture is emerging of an unscrupulous third force determined to take advantage of that “perfect storm.” The UN, which has been releasing regular situation reports since Sunday, has uncovered “strong indications” that someone set out to deliberately spark an ethnic riot. “It was to some degree orchestrated, targeted and well-planned,” UNHCR Spokesman Rupert Colville told reporters in Geneva on Tuesday. “The incident began with five simultaneous attacks in Osh involving men wearing balaclavas and carrying guns. It looked like they were seeking to provoke a reaction. For example, one of these attacks was on a gym, which was known to be the haunt of a criminal gang. There are quite a few criminal gangs in Osh, but targeting that gym was likely to provoke a reaction.”

Mirsulzhan Namazaliev, director of the Bishkek-based Central Asian Free Market Institute and a writer for the New Eurasia Web portal, backs the UN account. “Of course there was an inter-ethnic problem.” he said. “But in fact what happened in the south was not a natural process, because it was provoked by certain elements – I would say criminal elements – who were interested in doing this. Of course it was organized.”

The question now is who those masked men were, and more importantly who they were working for. The interim government that came to power during the violent riots in April was quick to blame ousted President Kurmanbek Bakiyev, who is from the Jalalabat region and has a political stronghold there, but he has vigorously denied such accusations from his exile in Belarus. Others have pointed the finger at the “neighboring countries,” including Russia. One theory is that the Kremlin refused to send troops because Rosa Otunbayeva wouldn’t bow to unspecified Russian demands, but even proponents admit they have no evidence for it.

Nor is there consensus on the provocateurs’ strategic goals. Namazaliev suggested the idea may have been to create a diversion to draw the army into the south to open the way for a coup attempt in Bishkek. But the capital has so far been calm, and the more orthodox line of thinking is that the rioters and whoever was behind them wanted to disrupt a referendum on changes to the Constitution planned for June 27. The referendum is meant to pave the way for fresh elections planned for this fall, and acting President Rosa Otunbayeva – who recently told Snob magazine that she was sticking to her plan to “introduce democracy in six months” – promised Tuesday that it would go ahead as planned.

That sense of hopelessness was not helped by the interim government’s signal failure to guarantee security even after declaring a state of emergency. Its political capital has never been high in the south, where Bakiev was popular, but now trust is virtually extinguished – especially following reports of security forces standing by or even taking part in the violence. It has also come under fire from the Bishkek intelligentsia not only for failing to respond, but also for failing to foresee attempts to disrupt the June 27 referendum. “They knew something like this would happen, but they expected it closer to the date of the poll,” said Namazaliev.

The problem is that the government is in a kind of limbo, said Leonid Ivashov, the vice president of the Academy of Geopolitical Affairs and a former General-Colonel of the Russian Army. “They’ve rejected authoritarian methods, but they haven’t built democracy in the republic,” he said.

But it is not just a failure of the ability of the interim government, but also of the political will of Kyrgyzstan’s neighbors and supposed allies in the Collective Security Treaty Organization, a regional grouping led by Russia that has been touted as a NATO-like guarantor of security. Despite a very public appeal for help, Russia and other CSTO countries have refused to send peacekeepers to help impose order.

That may be understandable – the task of stabilizing another state’s internal ethnic conflict is a notoriously tricky one, from which intervening nations seldom emerge with credit. But it is a serious test of Russia’s own stated ambitions in the region. Back in February Russian President Dmitry Medvedev said the CSTO’s “rapid reaction force” would equal that of NATOs. But when Otunbayeva appealed for peacekeepers, it became clear that no such rapid reaction force exists. And although Russian planes carrying humanitarian aid began to arrive in Bishkek on Wednesday, Ivashov said that putting together such a response operation should take no more than six hours – not the best part of a week

Kuwait Times: Russia's poisoned chalicehttp://www.kuwaittimes.net/read_news.php?newsid=NzA4NjQ4ODMw

Published Date: June 17, 2010 By Anna Smolchenko

When a bloody uprising in Kyrgyzstan toppled president Kurmanbek Bakiyev in April, Russia was the first foreign state to reach out to the ex-Soviet nation promising humanitarian aid. Russia's swift reaction at a time when the West was just scrambling to formulate a coherent response, was widely seen as a bold foreign policy success strengthening Kremlin's hand in the strategic country. But when fresh ethnic tension in Kyrgyzstan exploded into brutal riots, leaving at least 170 people dead and putting the country on the brink of civil war, Russia's reaction was far more ambivalent.

Russia was the first country Kyrgyzstan reached out to with a request to send troops, a demand that was rapidly turned down by Moscow, which instead has taken several days to formulate the terms of assistance it might provide. Painfully aware of its disastrous venture into Afghanistan in Soviet times, Moscow appears to be acting with the utmost caution over clashes to avoid being pulled into a potentially devastating conflict.

Analysts said Russia's influence over the Central Asian state appears to be a poisoned chalice as both a military interference and non-involvement could have grave repercussions for years to come. "Russia does not want to be accused of directly interfering in Kyrgyzstan because of the potential for a much wider conflict in the region that would almost certainly bring Uzbekistan and Tajikistan into any expanded conflict," said Chris Weafer, chief strategist with Uralsib investment bank in Moscow. "The lastthing it needs is to be accused of taking sides in the region or of being involved in another Georgia scenario," he added, referring to Russia's 2008 conflict with Tbilisi that badly hit ties with the West.

Konstantin Zatulin, a parliament deputy representing the ruling United Russia party, said the Soviet Union's decade-long war in Afghanistan meant the Kremlin would want to avoid a similar scenario at all costs. "Russia is very cautious about sending its troops to Asia," said Zatulin, who is director of the Institute of CIS Countries. "Rival sides in Afghanistan turned to us in late 1970s. What we got as a result was a years-long war that has ruined many lives.

Government sources, speaking to AFP on condition of anonymity, confirmed Russia was keenly aware of its Soviet war experience in Afghanistan and that of its Western allies in Iraq and Afghanistan and had no current plans to send troops to the country. Analysts describe the Ferghana Valley, scene of the most recent riots, as a witch's brew of historic animosities and inter-ethnic rivalries that have the potential to destabilise the entire Central Asia. Its problems are rooted in history when the region wasarbitrarily divided among Uzbekistan, Kyrgyzstan and Tajikistan under Stalin.

Soviet leader Mikhail Gorbachev sent troops to Osh after hundreds of people were killed in similar riots in the 1990s. Analysts say the Kremlin, who has held a grudge against Bakiyev ever since he let the US military base remain in the country, all but encouraged the April uprising in the Kyrgyz capital Bishkek which left nearly 90 dead. But soon after the Russian authorities largely grew disillusioned with the interim leadership as they got entangled in corruption scandals raising the risk that Russian multi-million-dollar assistance could be frittered away.

Signs began to emerge that after an initial warm welcome for the government of Roza Otunbayeva, Russia took steps to distance itself from the interim leadership. Prime Minister Vladimir Putin said last month Russia at times had no clear idea of the Kyrgyz "internal processes". Few however expected that simmering ethnic tensions in the country would spin out of control. "There is a disappointment" in Russia, said Zurab Todua, an expert on post-Soviet countries at the Institute of Religion and Policy. "For now, Russia stepped back and is waiting for the situation to develop further." - AFP

Itar-Tass: Police block Gakayev's gang in highland Chechnya

http://www.itar-tass.com/eng/level2.html?NewsID=15233313

17.06.2010, 00.56

GROZNY, June 17 (Itar-Tass) - Police blocked a group of gunmen near the entrance into Vedeno Gorge, Chechen Republic, on Wednesday, the republic's leader, Ramzan Kadyrov, told reporters.

The gunmen were detected in a mountainous wooded area near the village of Serzhen-Yurt. There is information that it the gang led by Gakayev.

"A joint unit of Shali police, an Interior Ministry’s department for the South Federal District and servicemen of the battalion "South" were deployed in the area within a short period. Using a loudspeaker, the police offered the militants to lay down arms and come out of the forest. The authorities repeated the proposal in a radio message.

"The militants opened fire. At present, police are taking active measures to neutralize the gunmen. The body of one militant has been found," Kadyrov said.

He identified him as Artur Dudurkayev, a resident of the village of Tolstoi-Yurt.

Police believe the militants have sustained more casualties. A search for their bodies is underway.

The operation codenamed Vozmezdiye (Retribution) began on May 8. Some 15 gunmen were destroyed last week, including Yasir Amarat, a native of an Arab country.

He has been in Chechnya since 1996 and trained dynamiters, and masterminded acts of terror and attacks on law-enforcement personnel.

Kadyrov said catching Doku Umarov, the leader of Chechen terrorists, is a matter of time, but it is a priority task.

According to Kadyrov, police intercepted a flash card which Umarov had sent to his representative in Ukraine.

"I translated his /Umarov's/ words on the flash card thus: my health's at the final stage, nobody' helping me, I can do nothing myself, I don't control anything, there’re no communications, and the only thing that is left to do is to mine myself and blast me," Kadyrov said in an interview to Russian news service radio.

He underlined that every point in the republic is under control.

"Catching him is a matter of time. We have people working in the mountains, in forests and in villages. The network of agents, criminal police and law-enforcement personnel look for them, find and destroy," the Chechen leader added.

June 17, 2010 12:13

Interfax: Two servicemen injured in operation in Chechnyahttp://www.interfax.com/newsinf.asp?id=171372

MOSCOW. June 17 (Interfax) - Two servicemen from the Russian Interior Forces were injured in a special operation in Chechnya and have been hospitalized.

Security forces spotted a group of unidentified people in a forest four kilometers away from the community of Serzhen-Yurt in the Shali district, who put up armed resistance, a law enforcement source told Interfax on Thursday.

Two Interior Forces contract soldiers were wounded and hospitalized. One of the gunmen was killed by return fire.

It was reported earlier that the body of a man was found at the scene. "He has been identified as Artur Dudurkayev, a resident of the village of Tolstoy-Yurt," Chechen President Ramzan Kadyrov said.

Intelligence information indicates that the militants suffered more losses, and a search for their bodies is under way.

va mj

AP: Analysis: A new venue for US-Russian cooperationhttp://www.google.com/hostednews/ap/article/ALeqM5jpL14EF8pHp2Wd061DG7BdFQhBiAD9GCKD900

By BARRY SCHWEID (AP) – 8 hours ago

WASHINGTON (AP — A fresh crisis in former Soviet Central Asia offers an opportunity for cooperation when Russian President Dmitry Medvedev calls on President Barack Obama at the White House next week.

Hundreds of civilians have been killed and tens of thousands driven from their homes in ethnic violence in Kyrgyzstan, the site of an airfield that serves as a key transit hub supporting the U.S. war effort in Afghanistan.

Tragic as the violence in Kyrgyzstan is, it gives the U.S. and Russia a chance to work together in a country where both have vested interests.

President Kurmanbek Bakiyev was ousted in April and a referendum on a new constitution appeared set for June 27. Interim President Roza Otunbayeva, backed mostly by ethnic Uzbeks, has accused Bakiyev's family of instigating the violence to try to stop the referendum.

She says she has talked to Medvedev about sending in Russian troops but he refused. Russia also has military facilities in the country, where Washington and Moscow have competed for influence following the Soviet collapse.

Civil war threatens, perhaps a broader regional conflict. The Kyrgyz in the south of the one-time Soviet republic have supported Bakiyev. Ethnic Uzbeks, a minority, have backed the interim government.

There already are reports militants from neighboring Tajikistan have been shooting both Uzbeks and Kyrgyz.

In announcing that Obama and Medvedev would meet, White House spokesman Robert Gibbs said the two leaders might explore cooperation in such areas as trade, investment and innovation. Russia is trying to launch its own version of Silicon Valley.

But there is much more to talk about, especially the nuclear programs of Iran and North Korea, and now the threat the already costly conflict in Kyrgyzstan could spread.

The two leaders will go on from Washington to Toronto for G8 and G20 meetings of world leaders that could be an opportunity for wider discussions.

Russia has been drawing closer to the Obama administration, first with an agreement on a new treaty reducing their stockpiles of nuclear weapons and then helping to pass new U.N. sanctions designed to squeeze Iran into agreeing to safeguards against Tehran developing nuclear weapons.

The U.N. sanctions were the result of compromises that produced measured steps.

In a major sign of resolve after passage, Russia pledged to freeze delivery of an $800 million package of S-300 air defense missiles to Tehran, thereby plugging a potential loophole in the eight categories of banned conventional weapons.

Six-party negotiations over North Korea's nuclear weapons program are in indefinite suspension. Russia, a participant, has been aboard with the United States in seeking to end the program and presumably will stay on board if a way can be found to reopen the talks.

EDITOR'S NOTE _ Barry Schweid has reported on diplomacy for The Associated Press since 1973.

Copyright © 2010 The Associated Press. All

16 June 18:00

Premier.gov.ru: Prime Minister Vladimir Putin chairs a meeting of the Government Presidium

http://premier.gov.ru/eng/events/news/11026/

Russia is a world leader in its reserves of oil, natural gas, gold, diamonds, silver, copper, lead, iron ore and coal. This is our natural competitive advantage, which we must use, but use wisely. Ultimately, mining accounts for over 30% of the country’s GDP. Today geological exploration is a promising and attractive enterprise, where each rouble invested by the government attracts 10 roubles of private investment." Vladimir Putin At a meeting of the Government Presidium

Transcript of the beginning of the meeting:

Vladimir Putin: Good afternoon, ladies and gentlemen,

As usual, let's begin with the latest updates.

We have devoted a lot of time and attention to removing various unnecessary administrative barriers, especially for the construction industry. Mr Kozak, please. I asked you to prepare a relevant proposal.

Dmitry Kozak: Yesterday you signed a government executive order approving an action plan to improve government supervision and licensing policies as well as streamline government services for the construction industry and urban planning. We held extensive discussions on the subject with the construction industries and concluded that the root of the problem lies in the economy, where, as a result of several historical factors and the lack of progress in implementing reform, investors in major construction projects face some of the most significant administrative barriers.

This executive order and the government's action plan to eliminate administrative barriers are especially relevant for the construction industry today, because data from the Federal State Statistics Service shows that in the first four months of the year the Russian construction industry has failed to reach its pre-crisis level in terms of construction volume and the number of people employed. This order should give a fresh impetus to this industry (if we implement it), raising it to new heights and creating more favourable conditions for investment in major construction projects.

We started preparing this action plan long ago, late last year.

We have already started working on the measures that we have reached an agreement on and that did cause any fundamental differences. A number of measures in the action plan

are being implemented. The plan will specify their deadlines. We expect to finish half of them in the first six months of next year, as required by the government executive order.

One of the key issues for eliminating administrative barriers, allocating land and ensuring that land management officials act transparently is improving the mechanism for spatial planning. Following a previous government directive, we prepared and introduced into the State Duma a draft federal law to improve the spatial planning system, which has turned out to be a very important area of our work, because, unfortunately, the system has been overwhelmed with red tape. We've been unable to finish this work for six years, but the draft law that was approved by the government may help us to make substantial progress.

In addition, the draft executive order includes some other measures, such as the creation of a federal geographic information system for spatial planning. The lack of such a system is another major impediment to site development projects, especially in cases when the overall plan or site development plans developed by the regions of the Russian Federation have been prepared, but the quality is low due to a lack of a unified information system.

The new legislation will also streamline rules for allotting land for construction and prohibit allotting land without consulting a comprehensive auction list, which will be established by the law.

We also plan to develop - and this will take some time - amendments to land management and urban planning legislation in order to get rid of the very corrupted procedure for categorising land and transferring land from one category to another, which slows down the process of putting land into economic use.

The new legislation also envisions tax incentives encouraging landowners to put land available for major construction projects into economic use.

There is another very important provision, which complements another government programme. This provision will oblige government bodies to publish information on official websites about all unoccupied land available for major construction, as well as information about all administrative procedures necessary to be carried out in a particular municipality to acquire land and receive the right to its development.

Another important area of our work is strengthening the institution of independent review of project documentation. We should work very closely on this issue. This is a very serious challenge. We need to work out all these mechanisms so that both government and independent experts could review construction projects.

It's also necessary to root out abuse that takes place when new facilities are connected to utilities systems. This is a critical problem that prevents us from speeding up administrative procedures in construction.

Everything, or almost everything except maybe the amendment to the land legislation, will entail extensive reform and an overhaul of land categorisation principles. We expect to finalise all the documents necessary to eliminate administrative barriers in 2010, and we must do everything in our power to ensure that this gets done. If we are successful, we can greatly improve the situation in the industry, which has a decisive influence on the country's economy.

Vladimir Putin: Good. We should finish everything this year, as we agreed. Please do not put this issue on the back burner.

Mr Khloponin (addressing Presidential Envoy to the North Caucasus Federal District), the governor of the Stavropol Territory has requested that the facilities of Mineralnye Vody Airport be transferred to the ownership of this territory. You recently held a meeting to discuss this issue. How is this going? This airport will be upgraded and further developed.

Alexander Khloponin: Mr Putin, following your instruction we held a meeting with all the ministries and agencies involved, as well as with the government of the Stavropol Territory. At the meeting we hammered out the necessary decisions.

On July 1 all the legal documents should be complete, and a certificate on the transfer of the airport facilities to the ownership of the Stavropol Territory should be submitted to the government. The government of the Stavropol Territory and the Ministry of Transport will look into the matter and decide what additional funds are needed to reconstruct the runway and develop the airport infrastructure.

We have coordinated the issue with all the ministries concerned. All necessary documents and regulatory acts will be complete by July 1.

Vladimir Putin: Good, thank you. Mr Trutnev (addressing Minister of Natural Resources and Environment), you planned to meet with our Chinese partners in Khabarovsk to discuss transborder rivers. What exactly do you intend to discuss?

Yury Trutnev: Mr Putin, as you know, pollution of transborder rivers has caused serious concern for residents of Russia's Far East.

The Russian-Chinese agreement for joint preservation and sustainable management of natural resources expired in 2008. We set up a joint system for monitoring 40 types of pollutants. China spent almost $1.5 billion on a programme to treat wastewater. And there have been improvements in water quality, very significant ones in some indicators. However, other concerns remain. Some pollutants are still present at their maximum permissible concentrations. That is why we are meeting with our Chinese colleagues on the site: we want to make sure our previous efforts have been effective and outline a programme for the future.

Vladimir Putin: Good. I also asked you to draft proposals for cleaning up some northern regions, including the Franz Josef Land archipelago and the Northern Sea Route. I'm talking about massive pollution left over after the withdrawal of armed forces and some other units from the region. This mostly pertains to numerous barrels with petroleum products, which were abandoned and froze to the ground. Please, report on this issue.

Yury Trutnev: Following your instructions, we plan to make an inventory, do a cost assessment and make certain legislative improvements. After the bidding process we will need to transfer the ownership of the raw materials and resources retrieved in the clean up to the winner of the bid.

All necessary legislative changes will be introduced by the end of this year. The entire project is estimated to cost approximately 1.2 billion roubles, 110 million roubles of which will be spent at the preliminary stage. This work will serve as a necessary basis for further clean up operations at all 194 sites we have identified in the Russian Federation.

To be continued...

16 June 19:59

Premier.gov.ru: Prime Minister Vladimir Putin holds a meeting on the spending on national defence, security and law enforcement in the federal budget for 2011-2013

http://premier.gov.ru/eng/events/news/11027/

“We intend to buy only new, state-of-the-art equipment and not what was designed twenty or even thirty years ago. For this purpose, we made a full inventory of the military industrial complex and specified basic requirements for military production.” Vladimir Putin At a meeting on the spending on national defence, security and law enforcement in the federal budget for 2011-2013

Vladimir Putin's opening speech:

Good afternoon, colleagues,

We continue our work on coordinating the main budget parameters for 2011 to 2013. Today we will discuss proposals on financing law enforcement, national defence and security.

Here we should complete the projects that we previously started and establish our future priorities.

First of all, I am talking about creating a new image for the Armed Forces, primarily, providing new equipment for the Army and Navy.

Thus, we are seriously increasing the size of defence orders. This year it will reach a record-breaking sum of 1.17 trillion roubles, 375 billion roubles of which will be used to pay for large deliveries of new equipment.

I would like to emphasise that we intend to buy only new, state-of-the-art equipment and not what was designed twenty or even thirty years ago. For this purpose, we made a full inventory of the military industrial complex and specified basic requirements for military production.

Of course, we should draft our rearmament plans with regard to the current economic situation and our budget. So, the Ministry of Defence and other state clients of the rearmament programme were asked to prepare detailed calculations and justification for the amount of necessary budget spending for 2011 and the following years. We will discuss them today.

The second project under way is reforming the military compensation system. In 2007, we raised this issue, specified the main requirements and began large-scale reforms of the salaries paid to military officers. Now, we should decide on the final requirements for this reform, set the deadline and establish the amount of increased compensation that will be paid to military officers.

At a meeting held on June 2, the Finance Ministry was charged with forming the corresponding intergovernmental commission. I would like Mr Kudrin to report on the results of this today.

Let's get down to work.

FT: Time, and credit, running out for ‘Putin’s banker’http://blogs.ft.com/beyond-brics/2010/06/17/time-and-credit-running-out-for-putins-banker/

June 17, 2010 7:00am

By Catherine Belton and Courtney Weaver

Will the Russian government cut off the man once dubbed “Putin’s banker”? It might seem a highly unlikely proposition. But investors are worried that Sergei Pugachyov, the mysterious founder of Mezhprombank and a senator representing the Siberian republic of Tuva, could become the first high profile Russian tycoon to default on a eurobond since the 2008 crisis swept the market.

Yields on Mezhprombank’s €200m eurobond have soared this week to levels not seen since October 2008 amid fears the bank would not be able to pay off the bond when it falls due on July 6. Today it was trading at about 90 per cent of the nominal price.

The bank, at the centre of a financial industrial group with assets in shipbuilding and real estate, has historically received a great deal of government support. Since the crisis hit, Mezhprombank has been one of the biggest recipients of unsecured anti-crisis loans issued by the Central Bank.

But while the majority of Russian banks have already started paying these loans off, Mezhprombank has not. According to Alexander Danilov, senior analyst at Fitch ratings agency in Moscow, out of the remaining 60bn roubles in outstanding unsecured loans owed to the Central Bank (down from a total 3.5 trillion roubles owed at the height of the crisis), Mezhprombank owes more than half.

Last week, Fitch and Standard and Poor’s lowered their outlook on Mezhprombank, warning of low liquidity and expressing concerns over its ability to repay the eurobond on time. Moreover, formally, “it has used up all its capacity to borrow from the central bank,” Danilov says. “There is a risk they may not be able to make the payment.”

A deal recently proposed by Mr Pugachyov to raise more cash by selling off his vast Severnaya Verf and Baltiisky shipyards to the state shipbuilding corporation OSK for about $3bn has met with a cool response from Igor Sechin, the powerful deputy prime minister. The shipyards are becoming hot properties as potential centres for building French Mistral warships.

Last week Sechin said he had received no proposal from Mr Pugachyov, and that he hoped Mezhprombank would be able to sort out its debt problems by itself. With debts owed to the state piling up, there is no reason for the government - which is battling to rein in its budget deficit - to pay such a sum for the yards, analysts say. It looks like Mr Pugachyov’s credit with the Russian government could be running dry.

Mezhprombank told beyondbrics it would be able to repay the eurobond and says there is no connection with the shipyard sale. In a conference call with investors, the CEO of the bank Jerry Kowalsky said “the bank has ample liquidity to repay the 6 July €200m Eurobond”. He added that investors should keep in mind that Mr Pugachyov has other assets on top of shipyards.

Those assets include the French luxury food chain Hediard, and with Mr Pugachyov making it onto the Sunday Times’ British rich list with an estimated fortune of $750m this year, he may well find the cash for the eurobond in a pocket somewhere.

But as Steven Dashevsky - a founder of the Russian Special Situations Funds - points out, the fears over the eurobond are “a very powerful illustration of how weak the fundamentals are for many of these financial industrial groups.” He added that their wellbeing substantially depended “on their relationship with the Kremlin.”

With government finances tighter, the honour of being dubbed “Putin’s banker” nearly a decade ago may not get Mr Pugachyov very far.

JUNE 16, 2010, 4:02 P.M. ET

WSJ: Medvedev's Star Adviser http://online.wsj.com/article/SB10001424052748703509404575300233507796008.html?mod=googlenews_wsj

Arkady Dvorkovich has been charged with turning the Russian President's tough talk into action

By Ira Iosebashvili

Even though the Moscow office, which once belonged to Leonid Brezhnev – the Soviet leader from 1964 until 1982 – is enormous, the chess board stands out. The room is now occupied by Arkady Dvorkovich, Russia's top presidential economic advisor but also a president in his own right – of the Russian Chess Federation. He credits the game with having taught him how important it is to know one's opponent.

He will need all of his tactical nous in the coming months as he takes on his latest foes: Russia's nearly 800,000-strong army of bureaucrats.

Mr. Dvorkovich's boss, President Dmitry Medvedev, has said these civil servants threatens to "swallow society whole". With oil prices wavering, Mr. Dvorkovich is looking to fire one in five bureaucrats in order to free up funds to eradicate the budget deficit by 2015 and deal a blow to endemic corruption in the country.

Mr. Dvorkovch, 38, also wants to wean Russia off its addiction to oil profits by turning the country into a hub for technological innovation and Moscow into a world financial center. To do that, Russia has to make its economy more efficient and attract foreign investment in order to stay competitive with other emerging markets.

"Short term, our biggest threat is the debt crisis in Europe, but long term, all of our threats are internal," says Mr. Dvorkovich. "Corruption, a poor business climate, insufficient incentives to innovate - these are the things that can hurt us. This is what we must make an effort to fight."

Yet many of Russia's most powerful cliques, from the top bureaucrats to the leaders of the oil and gas industry, are lined up on the other side of the chessboard from Mr. Dvorkovich.

Although Mr. Medvedev and his team have made battling corruption and a modernization drive the cornerstones of the presidency, critics claim that little has changed. Russia finished near the bottom of Transparency International's Corruption Perceptions Index

last year – just below Kenya and Ecuador – and corruption drains an estimated one third of the country's gross domestic product every year.

Meanwhile, Russia's economy still lives and dies by oil profits, which account for some 60% of GDP, while economic growth in the first quarter fell far short of government estimates, despite expectations of a swift rebound from last year's crisis. Although Mr. Dvorkovich knows who his opponents are, he is careful about naming names.

"They are those who thrive on the old system, on budget inefficiency and a resource based economy," says Mr. Dvorkovich. "Those who are in power and have resources are trying to defend themselves from the ones pushing for change."

But bureaucrats – who will still be a powerful voting bloc in the 2012 election – are unlikely to take the layoffs lying down. Nor are the nearly 300,000 police officer that Mr. Medvedev is planning to cut over the next two years as part of a wholesale spring-cleaning of the Interior Ministry.

As proof that the fight against corruption has not stalled, Mr. Dvorkovich is quick to highlight recently passed laws making it harder for government employees to shake down businesses and individuals: People can no longer be arrested for minor economic crimes, a practice that led to extortion by authorities. Company inspections – another means for bribe taking – are down across the country, while new laws will be enacted at the beginning of July to make it easier for foreigners to receive registration and work permits.

"These are all very big steps that improve the business climate," says Mr. Dvorkovich. "When Medvedev makes his decisions, he pushes for implementation as quickly as possible. He is very tough about that. If he says something, it should be done."

Yet the limits of Mr. Medvedev's powers were starkly illustrated by the case of Sergei Magnitsky, a lawyer who tried to expose a $500 million tax fraud but instead found himself awaiting trial in Moscow's dreaded Butyskaya prison after he was thrown in jail by the very members of the tax police he had accused.

When Mr. Magnitsky died in prison last November after months of allegedly being kept in a freezing cell and denied medical treatment for a gall bladder condition, Mr. Medvedev was publicly outraged. And yet, few heads rolled. While several low ranking officials lost their jobs, none were brought to trial. Meanwhile, another prisoner – businesswoman Vera Trifonova who was accused of fraud – died in April from a pulmonary embolism caused by a catheter that surgeons had left in her thigh. This, say critics, showed that few, if any, changes had resulted from Mr. Magnitsky's death.

There has been more obvious success in the reform of Russia's macroeconomic policies, many of which were overhauled after unemployment soared, credit froze and the ruble lost more than a third of its value during the 2008 crisis.

"We now have a refinancing system for banks, where the central bank can provide liquidity in difficult times," says Mr. Dvorkovich. "We used the crisis as an opportunity to restructure inefficient companies and initiate labor market policies. And we started on the path to flexible exchange rates."

Those macroeconomic policies may be put to the test soon, if Europe's debt crisis intensifies and capital once again drains from emerging markets like Russia. For now, though, the recent drop in oil prices and the value of ruble caused by eurozone debt worries have only worked to Russia's advantage, according to Mr. Dvorkovich.

He says: "A strong ruble was good for attracting more foreign direct investment into Russia, because it made a good case for the economic recovery. But many of our companies claim that they need a weaker ruble to stay competitive. So you can say that ruble weakness is good for us, to a point."

Oil prices, meanwhile, are "perfectly okay" at around $70 a barrel, says Mr. Dvorkovich.

He also points to April's $5.5 billion eurobond issue, the first time Russia has tapped the foreign markets in 15 years. Investors flocked to the deal, attracted by Russia's low sovereign debt levels and $400-plus billion in foreign reserves.

Mr. Dvorkovich says that Russia may return to foreign markets this year, even though the finance ministry had previously said that liquidity was plentiful at home and ruled out any further borrowing for the year.

"We may have some good periods this year and next year for additional borrowing," says Mr. Dvorkovich. "There are plans, but no specific dates. We're not in a hurry, and we're not going to borrow when market conditions are not good enough."

The possibility of a double-dip recession, which is becoming increasingly likely as the eurozone struggles to contain it's debt problems, shouldn't overly concern Russia, says Mr. Dvorkovich.

"Of course we have a plan – it's the same plan we've been using for the last two years to restart the economy. In case of an emergency, we can just flip the switch and do all these things a second time."

No Magic Bullets

Modernization has been a tougher sell in Russia's strategically crucial oil and gas sector, where antiquated drilling practices and technology have led to plunging profit margins for the country's most powerful companies, according to Mr. Dvorkovich.

"These companies can truly drive innovation because they have more resources than anybody else and need to modernize in order to stay competitive," he says.

Yet Mr. Medvedev's trusted aide admits that despite the occasional success – such as last month's announcement by state-owned giant Gazprom that it had discovered huge potential reserves of coal-bed methane gas in the country – the president's initiative's have provoked "thinking, and not action," among corporations.

"There are no miracle solutions here; no magic bullet," says Mr. Dvorkovich. "These are all long term projects. You just come in, work hard and make progress every day."

As proof that the government's policies are gaining traction, Mr. Dvorkovich points to the approval rating of Russia's ruling duo – Mr. Medvedev and Prime Minister Vladimir Putin. "Even when there was a crisis and things were hard, they still had the support of the people," he says.

Yet that support may be eroding: A recent poll has shown that approval has slumped, with Mr. Putin's at 61%, it's lowest level in three years, and Mr. Medvedev's at 53%, its lowest since April 2009. It is clear that Russia is waiting for the action to back up the words.

—William Mauldin contributed to this article.

Mr. Iosebashvili is a Moscow-based reporter for Dow Jones Newswires. He can be reached at Ira.Iosebashvili@dowjones.com.

RFE/RL: Protest In Russia Against 'Commercialization Of Education' http://www.rferl.org/content/Protest_In_Russia_Against_Commercialization_Of_Education/2074191.html

June 17, 2010 SAMARA, Russia -- About a dozen activists rallied on June 16 in central Russia to protest the "commercialization of education" in the country, RFE/RL's Russian Service reports.

The demonstrators in Samara demanded that a new law "On Amendments to Some Legislative Acts to Develop the Legality of State Enterprises" be annulled. The law allows schools and other educational institutions to engage in some business activities.

Amnesty International member Nikolai Yelizarov said at the gathering that the law would lead to the total commercialization of schools in Russia.

"This protest is needed to stop extortion in schools," he said. "Teachers in schools make parents pay [money] on a regular basis. That has become the norm and, in some cases, parents have to pay schools on a monthly basis."

The demonstrators collected more than 2,000 signatures under a petition protesting the

commercialization of the education system.

The protest was organized by the International Student Movement as a part of the international Day of Joint Symbolic Actions.

Itar-Tass: Forest fires sweep large areas in Russia's Far East

http://www.itar-tass.com/eng/level2.html?NewsID=15234304&PageNum=0

17.06.2010, 11.34

KHABAROVSK, June 17 (Itar-Tass) -- Forest fires have spread to a territory of 5, 468 hectares, a source from the Forestry department of the Far Eastern Federal District told Itar-Tass Thursday. Over the past twenty-four hours 13 forest fires have been extinguished on the territory of 465 hectares, the same source said.

Kamchatka and Chukotka are the only territories free of forest fires now. The worst situation has been reported in the Khabarovsk and the Maritime regions, where forest fires have spread to a territory of 2,888 and 1,270 hectares, respectively.

A special fire precaution regime has been imposed in the Komsomolsk and Khabarovsk districts because of a high extent of fire threat in forests. Admission to forest zones has been restricted, and vehicles have been banned altogether, said a source from the Head department of the Ministry for Emergency Situations for the Khabarovsk region.

A total of 662 forest fires have been registered in the Far East since a forest fire season began. The flames spread to more than 47,200 hectares of forest areas and 26,000 hectares of non-forested areas.

Under the Russian Forestry Code a responsibility for forest protection and fire extinguishing rests with the territorial executive bodies of the Russian Federation which are given subventions from the federal center. Departments of the Ministry for Emergency Situations give assistance to the territorial executive bodies of power in the event of forest fires coming close to settlements or posing a threat to human life and safety of important economic and other facilities.

National Economic Trends

Bloomberg: Shuvalov Says Easy Money Should Stay Away From Russian Stocks http://www.bloomberg.com/apps/news?pid=20601087&sid=a27S3laFyiqM&pos=3

By Ryan Chilcote, Ilya Arkhipov and Lucian Kim

June 17 (Bloomberg) -- First Deputy Prime Minister Igor Shuvalov urged investors to be wary of Russian stocks as policy makers in the world’s biggest energy exporter try to prevent the economy from overheating and encourage long-term investment.

“I’d be very cautious about stock investments in this country,” Shuvalov said yesterday in an interview with Bloomberg Television in Moscow. “I would welcome real investors who can build factories, something new in this country.”

Shuvalov, 43, is leading Prime Minister Vladimir Putin’s drive to attract investment and overhaul the economy after the worst financial crisis since the Great Depression ended 10 straight years of growth with a record 7.9 percent contraction. The English-speaking lawyer jets around Russia with Putin, meets foreign investors and acts as a link to domestic billionaires.

Russia’s modernization needs time, patience and long-term investments, Shuvalov said. Optimal annual growth rates shouldn’t exceed 5 percent in the next few years as the government seeks to control spending, and the central bank shouldn’t rush to let the ruble trade freely to avoid hurting domestic producers, he said.

The dollar-denominated RTS stock index followed oil prices lower in 2008, falling 72 percent, the most in a decade. The RTS surged 129 percent last year and is down 3.2 percent in 2010 as a barrel of Urals crude trades for $75, compared with a high of more than $140 in 2008.

“The conversion to a knowledge-based economy while having 7 percent growth rates is extremely difficult, because there’d be a big inflow of capital and everybody would want social spending,” Shuvalov said. “Growth of 4 to 5 percent would let us really modernize.”

Modernization, Innovation

President Dmitry Medvedev made modernization and innovation the catchwords of his administration after taking office in 2008. In the next 20 years, Russia should completely abandon oil and natural gas as a source of funding for the budget, instead funneling energy revenue into an investment fund as Norway has done, Shuvalov said.

The government plans to spend 110.5 billion rubles ($3.5 billion) through 2015 to build a Russian version of Silicon Valley, Vedomosti reported last week, citing a draft of the 2011 federal budget.

It isn’t fair to compare Russia with its BRIC peers Brazil, India and China, because of structural differences in their economies, according to Shuvalov. Russia is interested in “quality” changes to its economy rather than high growth rates, he said.

The Russian economy expanded 2.9 percent in the first quarter, compared with annual rates of 9 percent in Brazil, 11.9 percent in China and 8.6 percent in India.

Link to Oligarchs

Shuvalov earned a law degree from Moscow State University in 1987. He established links with the oligarchs when he worked at Alexander Mamut’s law firm, ALM, where clients included billionaires Boris Berezovsky and Roman Abramovich, owner of London’s Chelsea Football Club, Smart Money, a magazine published by the Vedomosti newspaper group, reported in 2008.

The deputy premier started his political career in 1997, a year before the country defaulted on $40 billion in domestic debt. During the credit crisis he was Putin’s liaison with the oligarchs, helping arrange bailouts for billionaires such as Oleg Deripaska, chief executive officer of United Co. Rusal, the world’s biggest aluminum company.

Shuvalov said he “doubts” Bank Rossii’s plan to let the ruble float in two years, because the government will need time to soften the effect of the change.

Floating Ruble

Bank Rossii has “sharply reduced” the extent to which it steers the ruble’s exchange rate and will come “very close” to allowing the currency to trade freely in 2011, central bank Chairman Sergey Ignatiev said in April.

The ruble may gain 20 percent in the next three years against the currencies of Russia’s major trading partners with the effects of inflation stripped out, according to a government report released June 4. It also may strengthen to 28 per dollar by the end of 2012 and maintain a “trend toward appreciation” over the next three years, the government said. The ruble traded for 31.25 per dollar at the close of trading yesterday.

Speculative inflows are helping drive up the ruble, making domestic products less competitive than imports and hurting Russian exporters, such as oil producer OAO Rosneft, that have ruble-denominated costs.

Foreign Direct Investment

Foreign direct investment slipped an annual 17.6 percent to $2.6 billion in the first quarter on an uneven recovery from the worst contraction on record, according to the Federal Statistics Service.

Overall foreign investment, including credits and flows into financial markets, rose 9.3 percent from a year earlier to $13.1 billion as investment in securities more than doubled, the statistics service said May 21.

While Russian stocks may be undervalued, Russia isn’t seeking investors interested in “quick and easy money,” Shuvalov said. The government prefers investors who will participate in state asset sales, which Medvedev wants to use to bring foreign capital into infrastructure projects such as roads and power plants.

“If we have investors wishing to buy, they are welcome,” Shuvalov said. “There will not be any kind of delay if we have a real investor who says, ‘We want a certain asset, please organize an auction.’ We need just 45 days.”

To contact the reporters on this story: Ryan Chilcote in Moscow, through the London bureau at rchilcote@bloomberg.net Ilya Arkhipov in Moscow at iarkhipov@bloomberg.net; Lucian Kim in Moscow at lkim3@bloomberg.net.

Last Updated: June 16, 2010 19:01 EDT

June 17, 2010 09:12

Interfax: Banks have 506.1 bln rbs on CBR correspondent accounts on June 17http://www.interfax.com/newsinf.asp?id=171306

MOSCOW. June 17 (Interfax) - Russian banks have 506.1 billion rubles on correspondent accounts in the Central Bank as of June 17 including 348.7 billion rubles for Moscow banks.

The balance on June 16 was 536.5 billion rublesand 381.6 billion rubles, respectively.

Banks had 795.6 billion rubles on deposit accounts in the Central Bank on June 17 against 792.3 billion rubles on previous day.

RIA: Russia may increase taxes to patch budget holes in 2011 http://en.rian.ru/russia/20100617/159457030.html

09:50 17/06/2010

MOSCOW, June 17 (RIA Novosti) - Russia's Finance Ministry has proposed to raise some taxes to tackle budget deficit next year even if oil prices stand at $75 per barrel, a Russian business daily said on Thursday.

The Finance ministry has sent to President Dmitry Medvedev its proposed guidelines for the next year's budget based on the average price of Urals blend crude oil of $75 per barrel, $5 more than previous estimates, Vedomosti said.

The budget deficit is expected to account for 3,6% of Russia's GDP in 2011, instead of initial estimates of 4%. The deficit is expected to decrease in the next two years and amount to nothing by 2015, the ministry said.

In order to patch budget holes, finance ministry officials have proposed raising some taxes, including the mineral extraction tax and export duties on raw materials, Vedomosti said. This would give the country an additional 379.2 billion rubles ($12.1 billion) in

2011, 396.6 billion rubles ($12.7 billion) in 2012 and 449.5 billion rubles (14.4 billion) in 2013, it said.

The ministry has also sent to the president its proposals on basic approaches to forming the national budget in 2011-13.

The budget revenues and expenses are projected to increase in the next three years, reaching 8.08 trillion rubles ($260 million) and 9.86 trillion rubles ($316 billion), respectively, which means that the state budget will still lack funds, the paper said.

Business, Energy or Environmental regulations or discussions

2010-06-17 07:33 Reuters: Russian markets -- Factors to Watch on June 17 http://www.iii.co.uk/news/?type=afxnews&articleid=7947610&subject=markets&action=article

MOSCOW, June 17 (Reuters) - Here are events and news stories that could move Russian markets on Thursday.

You can reach us on: +7 495 775 1242

STOCKS CALL (Contributions to moscow.newsroom@reuters.com):

Olma: A downward correction on the Russian market is possible in early trade due to uncertainty over dynamics of the global stock exchanges.

Troika: We are opening our prices this morning varied, from flat to down slightly.

EVENTS (All times GMT):

ST PETERSBURG, Russia- Economic Forum (to June 19).

ST PETERSBURG, Russia- Meeting of the CIS Economic Council.

MOSCOW- The Moscow Venture Forum

IN THE PAPERS:

Russia's central bank has requested that International Industrial Bank (IIB), owned by Russian businessman Sergei Pugachev, pay down 31 billion roubles of collateral-free loans before it provides further financing, Vedomosti writes.

Russian state-controlled oil company Rosneft wants to increase its stake in CPC, the only privately owned pipeline crossing the Russian territory, to nearly 10 percent from 3.83 percent it currently controls, Kommersant reports.

TOP STORIES IN RUSSIA AND THE CIS: TOP NEWS:

FOURTEEN KILLED IN RUSSIA'S DAGESTAN REGION KYRGYZ CITY STILL TENSE AFTER ETHNIC FIGHTING COMPANIES/MARKETS: ROUBLE UP BUT DOWNWARD PRESSURE REMAINS AVTOVAZ '09 NET LOSS WIDENS TO 49.2 BLN RBLS CHELYABINSK ZINC Q1 NET PROFIT 458 MLN RBLS RUSSIAN IIB PLANS TO REPAY BOND FROM OWN FUNDS PROFITS JUMP AT SBERBANK, PROVISIONS OFF SISTEMA MAKES Q1 PROFIT, SALES DOUBLE X5 RETAIL MAY ISSUE BONDS WORTH $500 MLN ECONOMY/POLITICS: WORLD BANK CUTS RUSSIA 2010 GDP GROWTH F'CAST MORE GOVT SPENDING WON'T HELP RUSSIA ECONOMY-FM GEORGIA C.BANK RAISES REFI RATE TO 6.25 PCT RUSSIA WANTS TO SELL MISSILES TO TURKEY-RIA ENERGY: OIL TARIFF TO ADD $11 BLN TO RUSSIA BUDGET ROSNEFT, CHEVRON TO DEVELOP RUSSIA OIL FIELD TRANSNEFT Q3 OIL EXPORTS TO RISE 1.2 PCT KAZAKH MAY OIL, CONDENSATE OUTPUT RISES M/M COMMODITIES: KAZAKHSTAN RAISES GRAIN, FLOUR EXPORTS KAZAKH MAY COPPER OUTPUT FLAT MONTH-ON-MONTH

MARKETS CLOSE/LATEST:

RTS 1,402.6 +0.07 pctMSCI Russia 748.9 +0.12 pctMSCI Emerging Markets 944.5 +0.12 pct

Russia 30-year Eurobond yield: 5.406/5.366 pct

EMBI+ Russia 252 basis points over

Rouble/dollar 31.2000

Rouble/euro 38.3000

NYMEX crude $77.13 -$0.54ICE Brent crude $77.95 -$0.19

For Russian company news, double click on

Treasury news Corporate debtRussian stocks Russia country guideAll Russian news Scrolling stocks news

Emerging markets top news

Top deals European companies

Keywords: RUSSIA FACTORS/ (maria.kiselyova@reuters.com, +7 495 775 12 42, Reuters Messaging: maria.kiselyova.reuters.com@reuters.net)

Bloomberg: OAO Razgulay, OAO Lukoil: Russian Stock-Market Previewhttp://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2010/06/16/bloomberg1376-L44E7D07SXKX-3.DTL

June 17 (Bloomberg) -- The following shares may have unusual price changes in Russian trading. Stock symbols are in parentheses and prices are from the previous close unless otherwise noted.

The 30-stock Micex Index slumped as much as 1.1 percent and closed down 0.1 percent at 1,369.59 in Moscow. The dollar- denominated RTS Index climbed 0.4 percent to 1,401.63.

OAO Razgulay (GRAZ RX): The sugar and grain producer said earnings before interest, taxes, depreciation and amortization, or Ebitda, rose 67 percent to 1.3 billion rubles ($42 million) in the first quarter, while sales fell to 5.8 billion rubles from 7.5 billion rubles in the first quarter of last year. Razgulay rose 0.7 percent to 42.48 rubles in Moscow.

OAO Lukoil (LKOH RX): Crude oil rose to a one-month high and gasoline surged after a U.S. government report showed that refineries cut operating rates and supplies of the fuel fell. Russia's largest non-state oil producer climbed 0.9 percent to 1,713.41 rubles in Moscow.

--Editor: Glenn J. Kalinoski

RenCap: New legislation will preserve status quo on distco last-mile disputes

http://www.businessneweurope.eu/dispatch_text11968

Renaissance CapitalJune 17, 2010

Event: The State Duma has passed the first reading of legislative amendments that are intended to ensure that all electricity consumers who currently pay use-of-grid tariffs to their local distribution companies (MRSK) will continue to do so until at least 1 Jan 2014. If enacted, the amendments would preserve the current arrangement, by which industrial and commercial customers cross-subsidise household consumption, for which tariffs are kept artificially low. A court ruling that aluminium giant Rusal could stop paying distribution tariffs had threatened MRSK Siberia with the loss of 21% of the company's total revenues, and was seen as setting a precedent that posed a serious threat to MRSK profitability generally.

Action: Positive for MRSK Holding and Russian distribution companies (distcos) in general, we believe.

Rationale: In our view, the long-term answer to eradicating these cross-subsidies is for each electricity customer to pay a price that reflects the true economic cost of supply. However, given Russia's historic legacy of very large cross-subsidies of households by energy-intensive consumers, it is apparent that distcos will continue to under-charge households for UTILITIES Derek Weaving +44 795 822 9167several years. In the absence of other sources of funding, the distcos will have to continue the practice of plugging the revenue gap by over-charging energy-intensive consumers. We believe investors will welcome the government's recognition of this situation and will judge that the threat of significant and sudden revenue loss for the MRSKs has been averted.

Vladimir Sklyar

Financial: EBRD funds Russian science and technology park http://finchannel.com/news_flash/Banks/65266_EBRD_funds_Russian_science_and_technology_park_/

17/06/2010 10:59 (00:18 minutes ago)

The FINANCIAL -- The EBRD has raised 31.6 million Euros in medium-term funding for one of the biggest operators of science and technology parks in Europe, Finland’s Technopolis Group, to help it complete its first such project in Russia, a 63.2 million Euro development springing up close to St. Petersburg’s Pulkovo airport.

The new facility, to be known as Technopolis Pulkovo, will introduce to the Russian market an entirely new concept of creating, operating and growing a commercially-funded science and technology park to support the growth of knowledge-intensive companies.

"Located in a city known for high-standard universities and fast-growing IT sector, the St. Petersburg facility will focus on a variety of technology and knowledge-intensive sectors with world class potential. These include software development for internet and mobile telephone content, communications, value-added software, financial services, security applications, systems integration and electronics," EBRD informed.

The Technopolis concept encourages technology transfers and networking by placing promising start-ups under the same roof as established firms, and matchmaking them with each other, as well as key local, national and international partners, financiers and potential customers. Targeted tenants include subsidiaries of leading international companies as well as local market leaders.

This physical proximity combined with the ability to arrange virtual global matchmaking solutions allows large technology companies, for instance, to outsource activities to small business tenants in their immediate orbit, giving start-up’s access to badly-needed investment capital.

Key to the commercial viability of this formula is the stress on flexibility, with respect to leases, space and services, thus allowing the facility to expand and contract to match the requirements of its tenants in varying economic conditions.

The Bank is the lender of record for the full 31.6 million Euros under an A/B loan structure. The EBRD is using its own funds to provide a 21.6 million A loan while the B portion of 10 million Euros has been syndicated to two Finnish commercial banks, Nordea Bank Finland Plc (7.7 million Euros) and Pohjola Bank Plc (2.3 million Euros).

The maturity of all these loans is five years. The borrower is OOO Technopolis St. Petersburg, which is wholly-owned by the Finnish-registered Technopolis Plc. Founded in 1982, Technopolis plays host to the largest technology chain in Europe -- with over 1200 companies based in its various facilities across the continent.

Reuters: Arabtec says not told of any Russia work-stop orderhttp://af.reuters.com/article/commoditiesNews/idAFLDE65G01420100617

Thu Jun 17, 2010 4:53am GMT

DUBAI June 17 (Reuters) - Dubai's Arabtec (ARTC.DU) said on Thursday it has not been informed about any decision by Russian authorities to stop construction on the 403-metre (1,322-foot) high Okhta Centre in St. Petersburg.

The United Arab Emirates' largest builder by market value, referred to an unidentified media report published on June 15 saying Russian President Dmitry Medvedev had ordered work to be stopped on the $2.7 billion tower, one of Arabtec's most important contracts.

"Arabtec was not informed about a decision to stop the project," the company said in a statement on Dubai's bourse website.

It has carried out foundation tests on the tower after winning the contract in April 2008, it said, adding it expects to win other preparatory works in the coming months.

In May, the St. Petersburg native Medvedev supported a UNESCO bid to halt construction of the glass-and-steel skyscraper among the baroque mansions of the city's historic centre.

The tower, set to house state-run gas giant Gazprom's (GAZP.MM) offices by 2016, has caused an outcry among residents of St Petersburg and opposition parties.

Arabtec, the main contractor on the project, has estimated to project value at 10 billion dirhams ($2.72 billion).

(Reporting by Thomas Atkins; Editing by Jason Benham)

VTB Capital: Government might cancel import duty for aircraft with over 250 seats

http://www.businessneweurope.eu/dispatch_text11968

VTB Capital17 June 2010

News: A government commission has approved the idea of cancelling the import duty on aircraft with over 250 seats.

Our View: Aircraft with between 50 and 300 seats are currently subject to a 20% import duty. Lowering the upper limit of the seat numbers is marginally positive for carriers focused on long haul destinations, such as Aeroflot and Transaero, since its expands the range of aircraft that they can import free of duty.

Elena Sakhnova

BNS: Aircraft manufacturers Antonov, UAC to form joint venturehttp://www.brahmand.com/news/Aircraft-manufacturers-Antonov-UAC-to-form-joint-venture/4179/1/14.html

Last Updated: Jun 17, 2010MOSCOW (BNS): Russia's United Aircraft Corporation (UAC) will join hands with Ukrainian aircraft manufacturer Antonov for the joint manufacturing, sales and post-sales services of the ‘An’ family of aircraft.

The two companies have agreed to form a joint venture, Russia’s Itar-Tass news agency reported.

The new company would be called UAC-Antonov.

The decision in this regard was taken after a meeting between Russian Prime Minister Vladimir Putin and his Ukrainian counterpart Nikolai Azarov, the report said.

Bloomberg: Russia Calls in International Industrial’s Debt, Vedomosti Says http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aJmqjpvASIOI

By Denis Maternovsky

June 17 (Bloomberg) -- International Industrial Bank, a Russian lender controlled by lawmaker Sergei Pugachyov, must repay 10 billion rubles ($320 million) it owes Bank Rossii today or it may have its license revoked, Vedomosti reported, citing unidentified people familiar with the matter.

The Moscow-based lender, which also has 200 million euros ($245 million) of bonds coming due July 6, owes a total of 31 billion rubles to the central bank and will require the help of its parent United Industrial Corp. to stay solvent, the Russian newspaper reported.

Last Updated: June 17, 2010 01:46 EDT

Bloomberg: RusHydro Seeks $45 Billion Market Value by 2015, Vedomosti Says http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aoRKSCzAlXXE

By Maria Ermakova

June 17 (Bloomberg) -- OAO RusHydro, a Russian hydropower utility, aims to boost its market value to $45 billion by 2015, Vedomosti reported, citing the company’s development strategy.

RusHydro plans partnerships and acquisitions abroad and seeks 25 percent of Russia’s energy supply market, the newspaper said, citing a copy of the strategy. The utility will also merge its engineering assets to provide power utility construction services aboard, Vedomosti said. Press officials at the Moscow-based utility declined to comment to the newspaper.

Last Updated: June 17, 2010 00:57 EDT

Alfa: RusHydro approves its new strategy until 2015

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Alfa BankJune 17, 2010

Kommersant reports that RusHydro's Board of Directors has approved the company's new strategy until 2015. The main item was the threefold increase in the company's MCap to $45 bln. Moreover, the company also plans to increase its retail segment to around 25% by purchasing SupCos and to expand its engineering segment. The company reiterated its plans to expand onto foreign markets and also to develop green energy projects, which, according to CEO Evgeniy Dod's previous announcements, will be the key new themes through the potential acquisition of new assets in Asia, Latin America or Africa as well as participating in greenfield projects there.

RusHydro is set to publish a more detailed strategy by the end of summer. At the moment, we treat this news as NEUTRAL for the stock, as the plans sound overly ambitious, and we do not expect a reaction from the market. We believe that its potential expansion into the retailing segment might create synergies with its existing generating business as long as it manages to get bargaining acquisition prices for these assets. These plans could be a strong M&A driver for RusHydro shares.

June 17, 2010 10:09

Interfax: Chelyabinsk Zinc posts 458 mln rubles net profit to IFRS in Q1http://www.interfax.com/newsinf.asp?id=171319

MOSCOW. June 17 (Interfax) - Chelyabinsk Zinc Plant (RTS: CHZN) closed Q1 2010 with net profit of 458 million rubles to International Financial Reporting Standards (IFRS), compared with losses of 224 million rubles in the same period of last year, the company said.

Sales revenue rose 72% to 2.685 billion rubles and earnings before taxes, depreciation and amortization (EBITDA) was 752 million rubles.

Pr

Bloomberg: Chelyabinsk Zinc Swings to Quarterly Net of 458 Million Rubleshttp://www.businessweek.com/news/2010-06-17/chelyabinsk-zinc-swings-to-quarterly-net-of-458-million-rubles.html

June 17, 2010, 2:22 AM EDT

By Maria Ermakova

June 17 (Bloomberg) -- OAO Chelyabinsk Zinc, Russia’s largest producer of the metal, swung to a profit in the first quarter from a loss a year earlier.

Net income was 458 million rubles ($14.7 million) from a loss of 224 million rubles in the first quarter of last year, the company said in a statement today. Sales rose 72 percent to 2.68 billion rubles.

To contact the reporter on this story: Maria Ermakova in Moscow at mermakova@bloomberg.net

To contact the editor responsible for this story: Torrey Clark at tclark8@bloomberg.net

VTB Capital: EVRAZ's Vitkovice might be partially shut down

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VTB Capital17 June 2010

News: Interfax reports that EVRAZ could close some of its capacity in the Czech Republic, after disruption in pig iron supplies from ArcelorMittal Ostrava.

Our View: EVRAZs Vitkovice has a capacity of 965ktpa of crude steel and 755ktpa of plate. It was expected to reach nearly full capacity by 3Q10 on the back of strong demand. However, its production has again been affected by a dispute with ArcelorMittal over the price it pays for pig iron. This news shows that the conflict has not been resolved and Evraz is considering its options.

While this news would not have significant ramifications for EVRAZ (due to the relatively small size of the asset and the even smaller P&L contribution) it is still negative, indicating that the production chain is not very clear and European markets are relatively weak.

UralSib: Highland Gold: Belaya Gora project receives support from regional government

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UralSibJune 17, 2010

Governor of Khabarovsk region offers his support to the project. Yesterday, the governor of Khabarovsk region, Vyacheslav Shport, announced his support for Highland Gold's (HGM - Hold) Belaya Gora project, ordering local authorities not to delay the paperwork on the construction of a new processing plant and approve all the necessary documents as quickly as possible. The state is looking to the Belaya Gora project to contribute taxes to the local budget and create jobs.

80 koz pa mine with marginal economics. The Belaya Gora deposit is 66 km from Highland Gold's Mnogovershinnoye mine and has 820 koz of GKZ gold reserves at 3.5 g/t. The company plans to start producing about 80 koz of gold in 2012, with some high grade ore being processed at the Mnogovershinnoye plant in 2010 and 2011 (adding 10-15 koz to annual output). The expected life of the mine is 10 years, and the project has a total capex of $113 mln. Our latest NAV estimate for Belaya Gora is $14 mln ($45 mln without a 70% execution risk discount). According to our valuation, the project's economics are not strong as the capex per oz ($1,400/oz of future gold output) is considerably higher than for other Russian gold mining projects ($800- 1000/oz). Moreover, Highland expects production costs to reach $450-500/oz at Belaya Gora, which is relatively high com- pared to the $300/oz seen at other large new projects in the Russian gold mining sector.

Positive impact on the stock is limited due to the small size of the project. We view this potential government support as a good indication that the project is moving forward, however, we note that at this stage Belaya Gora does not represent a big part of Highland's fair value (only about 5%). Were we to completely remove the project's execution risk discount, it will only have a moderate positive effect on our valuation for the company (NAV would gain 11%). We remain cautious on Highland Gold and retain our Hold recommendation for the name.

Michael Kavanagh

Reuters: UPDATE 1-AvtoVAZ posts wider loss for 2009http://www.reuters.com/article/idUSLDE65G0B220100617

2:52am EDT

* Posts 49.2 billion rouble loss, vs 24.7 billion in 2008

* Revenues almost halved to 92 billion roubles

* Operating loss 45.5 billion roubles, vs 26.1 bln in 2008

(Adds detail)

MOSCOW, June 17 (Reuters) - Lada maker AvtoVAZ (AVAZ.MM: Quote, Profile, Research, Stock Buzz), Russia's biggest car producer, said its loss doubled last year as sales slumped in the crisis, and it booked an asset impairment provision.

Net loss totalled 49.2 billion roubles ($1.58 billion), against a 24.7 billion net loss in 2008, AvtoVAZ said on Thursday.

Revenue fell to 92 billion roubles from 168 billion in 2008, said AvtoVAZ, in which French carmaker Renault (RENA.PA: Quote, Profile, Research, Stock Buzz) holds a one quarter stake.

Chief executive Igor Komarov said last week the company could return to operating profit this year as it has been the chief beneficiary of a government-sponsored 'cash for clunkers' scheme. [ID:nLDE65A11E]

For 2009, AvtoVAZ recorded an operating loss of 45.5 billion roubles, against a loss of 26.1 billion in 2008.

It has also performed a test for impairment of its fixed assets and booked a provision of over 14 billion roubles. (Reporting by Gleb Stolyarov; Writing by Maria Kiselyova; Editing by Dan Lalor) ($1 = 31.14 roubles)

DJ: AvtoVAZ, Renault Seek Tough Russia-Production Rules –Vedomostihttp://www.nasdaq.com/aspx/stock-market-news-story.aspx?storyid=201006161916dowjonesdjonline000746&title=avtovazrenault-seek-tough-russia-production-rulesvedomosti

DOW JONES NEWSWIRES

Jun 16, 2010

Russian auto maker AvtoVAZ (AVAZ.RS) and French partner Renault SA (RNO.FR) have asked authorities to tighten rules for producing vehicles in Russia, business daily Vedomosti reports Thursday.

Two weeks ago, AvtoVAZ Chief Executive Igor Komarov and Renault's executive vice president for Eurasia, Christian Esteve, discussed with Ministry of Industry and Trade officials the prospect of increased local auto-parts production.

The two executives, whose companies share an alliance in Russia with Nissan Motor Co Ltd. of Japan (7201.TO), disclosed their meeting last Friday at the opening of the Russian national exhibition in Paris but didn't give details. But employees of two Russian auto

makers and a ministry official told Vedomosti the meeting included discussion on imposing stricter conditions for vehicle assembly.

Current rules allow a foreign manufacturer operating in Russia to import parts at reduced duties of 0 to 5% -- as long as that company produces at least 25,000 vehicles a year; has the capacity to weld, paint and assemble car bodies; and sources enough parts locally so that imports don't exceed 30% of a finished vehicle.

But those rules, set by the ministry in 2007, are to expire in 2014. Last December, three ministries -- Finance, Economic Development, and Industry and Trade -- began allowing new tie-ups between foreign and Russian car companies to sign agreements with tougher conditions: annual production of 300,000 vehicles, with engines, transmissions and large, stamped panels sourced locally, the two workers said. The Industry and Trade official said the new partnership pacts require at least 50% of each vehicle to come from local sources.

None of the foreign auto companies now operating in Russia manufactures engines in the country, although AvtoVAZ intends to build engines using Renault technology while Italy's Fiat SpA (F.MI) and Russian auto maker Sollers ( SVAV.RS) plan similar cooperation. Representatives of all four companies declined to comment, Vedomosti says.

Website: www.vedomosti.ru

-Dow Jones Newswires; 212-416-2900

VTB Capital: Sberbank considers acquiring a controlling stake in a Polish bank

http://www.businessneweurope.eu/dispatch_text11968

VTB Capital17 June 2010

News: According to RBC Daily, Sberbank might consider acquiring more than 70% of the shares of Polish Bank Zachodni WBK from Allied Irish bank. The paper assumes the size of the deal at USD 2.5-3.8bn. Sberbank did not confirm the information.

Our View: The potential deal is in line with Sberbank's global expansion strategy and therefore is neutral for the stock. Previous reports have claimed that the bank was looking for assets in CIS (Kazakh BTA bank is one of potential targets, as well as a bank in Ukraine).

Dmitry Dmitriev

S&P: Russian OJSC Alfa-Bank Outlook Revised To Positive On Financial Profile Improvements; 'B+/B/ruA+' Ratings Affirmed http://www.cbonds.info/all/eng/news/index.phtml/params/id/463933

MOSCOW (Standard & Poor's) June 16, 2010--Standard & Poor's Ratings Services said today that it had affirmed its 'B+' long-term and 'B' short-term global scale counterparty credit ratings and its 'ruA+' Russia national scale rating on Russia-based OJSC Alfa-Bank. At the same time we revised the outlook to positive from stable.

"The outlook revision reflects Alfa-Bank's improving financial profile, namely its stronger balance sheet liquidity; the stabilization of asset quality and core revenues; and maintenance of capitalization at an adequate level," said Standard & Poor's credit analyst Elena Romanova.

Although the bank's financial profile has begun to recover somewhat ahead of those of domestic peers, the improvements largely depend on a sustained recovery in Russia's economy and markets. In addition, we have observed that the bank's management follows a conservative development strategy, which it has been implementing since 2009, which we believe should help it mitigate to some extent the continuing high risks that banks in Russia are exposed to.

The ratings reflect Alfa-Bank's stand-alone credit profile and do not include any uplift for potential extraordinary external support, either from owners or the government.

The bank's financial and business profiles have suffered as a result of the more challenging conditions in Russia and global markets. Alfa-Bank's loans overdue by more than 90 days stood at 13% of its loan portfolio at year-end 2009, but had fallen to 9% by March 31, 2010, as it has continued to restructure problem loans. Restructured loans amounted to 11.5% of total loans on Jan. 1, 2010.

Credit risks are exacerbated by high single-name and industry concentrations, especially in the high-risk construction sector, representing 14% of total loans on Jan. 1, 2010. Even though we anticipate a large share of restructured loans to turn performing, we still expect provisioning costs to remain high in 2010, and margins to come under pressure from tougher competition for deposits and good-quality borrowers. Consequently, profitability is likely to remain constrained, in our view.

The positive outlook reflects our view that Alfa-Bank's financial profile will continue to improve over the next 12 months, with asset quality and subsequent credit losses reducing to more manageable levels. Preprovision operating income is therefore likely to stabilize with a reduced cost of risk and enhance the bank's internal capital-generation capacity. We anticipate that the bank's current adequate capitalization will be sustained,

given the bank's more conservative asset growth targets in 2010.

"We would consider an upgrade if we see continued improvement in asset quality closer to pre-2008 levels, particularly with respect to the overall portfolio (including restructured loans), which we believe will lead to more robust profitability and capitalization," said Ms. Romanova.

A reduction or loss of this positive momentum would result in a revision of the outlook back to stable.

We could lower the ratings if we see a weakening of Alfa-Bank's credit profile, with a negative spillover onto the bank's financial and credit standing and liquidity and capitalization, although this is not our base-case expectation.

Cbonds pages: Alfa Bank

Issuer profile: Founded in 1990, Alfa Banking Group offers a wide range of products and operates in all sectors of the financial markets including corporate and retail lending, deposits, payment and account services, foreign exchange operations, cash handling services, custody services, investment banking services and other ancillary services to corporate and retail customers. As of November 1, 2006, Alfa Banking Group had 205 offices (including subsidiary branches, regional branches and outlets) throughout Moscow, St. Petersburg and other key cities in Russia (including subsidiary banks in Ufa and Kazan, regional branches and outlets). The Group also operates through subsidiary banks and offices in Kazakhstan, the Netherlands, Cyprus, the US and the United Kingdom and serves more than 1.8 million individual and more than 40 thousand corporate clients, including many of Russia’s top 200 companies. As of June 30, 2006, Alfa Banking Group had total assets of approximately USD 12.3 billion and total equity of approximately USD 1.0 billion. In the first half of 2006 Alfa Banking Group generated operating income of USD 359.3 million (versus USD 269.2 million in the first half of 2005 and USD 653.2 million in 2005) and net profit of USD 114.8 million (versus USD 87.3 million in the first half of 2005 and USD 180.6 million in 2005).

Outstanding issues:  8 issue(s) outstanding worth USD 2 835 000 000  2 issue(s) outstanding worth EUR 375 000 000

Issuer's rating:Standard & Poor's B+/Positive Int. Scale (foreign curr.) 16.06.2010Standard & Poor's B+/Positive Int. Scale (loc. curr.) 16.06.2010Standard & Poor's ruA+ National Scale (Russia) 16.06.2010Moody's Investors Service Ba1/Negative Int. Scale (foreign curr) 19.02.2009Fitch Ratings BB/Stable Int. Scale (foreign curr.) 27.05.2010Fitch Ratings AA-(rus)/Stable National Scale (Russia) 27.05.2010

Rus-Rating BBB+/Stable National scale (Russia) 25.11.2008National Rating Agency AA+ National scale (Russia) 08.12.2008

People’s Daily: Russian entertainment market forecast to grow 10 percent annually http://english.peopledaily.com.cn/90001/90777/90853/7028377.html

14:03, June 17, 2010

Entertainment will be a sector in Russia that enjoys annual growth of as much as 9.3 percent over the next five years, PricewaterhouseCoopers forecasts.

The fastest growth in the sector will be in video games, cable television, Internet access and online advertisement, the international consulting firm predicted.

Russia's "culture vultures" have followed the world trend of switching to the Internet and to digital media, the Novye Izvestia newspaper reported.

The country's entertainment market was estimated to be worth 16.38 billion U.S. dollars in 2009. By 2014, the market will expand to 25.58 billion dollars, according to experts.

In 2009, Russia ranked seventh among countries in Eastern Europe, the Middle East and Africa in terms of Internet accessibility.

A total of 2.9 billion dollars were spent by Russian Internet users last year despite the ongoing global economic slowdown.

Broadband TV News: Russian CTC channel debuts in Israelhttp://www.broadbandtvnews.com/2010/06/17/russian-ctc-channel-debuts-in-israel/

By Chris DziadulJune 17, 2010 07.22 UK

Russia’s CTC Media has launched the CTC International channel in Israel. According to the company, which is backed by MTG, the service is being distributed on the Yes satellite platform and HOT cable network, which have a combined total of around 120,000 Russian-speaking subscribers. CTC Media has signed a two-year, non-exclusive deal with the two broadcasters.

CTC International was launched in the US in December 2009 and is a 24-hour family entertainment channel. It sources 80% of its programming from CTC, CTC Media’s Russian national commercial station, and the remaining 20% from CTC Media’s Domashny and DTV channels.

CTC International’s target audience in Israel is the 1 million people, or 13% of the population, that speak Russian.

The pay-TV market in Israel is highly developed, with the number of subscribers already totalling 1.5 million, and HOT was the first company in the world to broadcast CTC content outside Russia, doing so on its VOD platform.

RusBizNews: Forest Trap on the Railroad http://www.rusbiznews.com/news/n816.html

17.06.2010 — AnalysisThe lumber manufacturers of Sredneuralsk have been trapped by the lawlessness disguised as a reform in the Russian railway transportation. Several months ago, the Sverdlovsk Railways halved the car supply to forestry enterprises. As the RusBusinessNews reporter has found out, the reform resulted in warehouses full of rotting timber stock and numerous employees on the brink of layoff. In the meantime, the regional authorities make believe that there is nothing to worry about.

Woods are chopped and lumber suppliers go flop 

The Ural Union of Lumber Manufacturers was the first to sound the alarm concerning the car supply deficit. Sergey Basmanov, the executive director of the union, informed RusBusinessNews that since April 2010 dozens of forestry enterprises in the Sverdlovsk Region have not been able to deliver their products to their customers. "The situation is on the edge of emergency. If it does not change, many companies will go broke ", he complained. 

Market participants agree with him. According to Sergey Kozmenko, a sole proprietor (Verkhnyaya Tura), in order to survive, a relatively large company must ship daily 4-5 gondola cars with timber to customers. However, two months ago, the Sverdlovsk Railways halved the car supply. "Stacked wood grew up to 10 meters at storage facilities (not more than 5-6 meters are allowed by safety regulations). The relations with partners were damaged, as we failed to supply the products on time. The key problem is that earnings dropped two times. I cannot make payments on the loans, because all the money is tied up in wages. And very soon I will not be able to pay even them", S.Kozmenko speaks out. 

At present, his enterprise is logging 100 thousand cubic meters of wood a year. Half of the products are transported by road transport. The other 50 thousand cubic meters have always been transported by the Sverdlovsk Railways. According to S.Kozmenko, the problem of insufficient car supply is not new to lumbermen - usually it arises in autumn when coal is transported to Russian regions. However, it has never been so severe. If

lumber manufacturers could at least explain the deficit of "forestry" cars by the preparation for the winter season, they can only make guesses about the reasons for the spring deficit. 

Everything started with the announcement that railway authorities made in April 2010, concerning major repair of rail tracks. The freight traffic of the Sverdlovsk Railways was brought almost to a standstill. The repair works finished, but the problem with freight traffic remained.

Some get a bagel, some get a bagel hole 

As it turned out, it is lumber manufacturers who go through distress today. Steel manufacturers who encountered some discomfort in April due to the repair of rail tracks came back to their routine transportation schedules in May. According to S.Kozmenko, railway authorities have much more favorable attitude to steel manufacturers than to "lumbermen". 

The fact is that railway transportations of lumber are not profitable. The transport cost for metal products is substantially higher than that of the wood. Furthermore, Sredneuralsk lumber is usually transported for short distances; thus, its transportation becomes even less profitable. "We do not ship wood farther than Samara. Longer distances are not feasible, as there they have their own producers ", S.Kozmenko explained. 

Representatives of the Sverdlovsk Railways, in their turn, state that they "can't help it". The rules of the game are set by private companies. "Over the last three years, the Russian Railways Company has reduced its share on the railroad freight market from 55 to 30%. At present, the company owns only 280 thousand cars out of 1 million cars. 100% of transportations of oil cargoes, cement, feed concentrates, grain, fertilizers and other products are performed by private railcar owners", the Sverdlovsk Railway press-service commented. The company thinks that consignors should start looking for a substitution for the Russian Railways. 

However, lumber manufacturers actually have no alternative. More than half of the car fleet of the Sverdlovsk railways is in the hands of non-governmental affiliates of Russian Railways - the First Cargo Company (PGK) and the new Second Cargo Company (VGK). "We contacted PGK, but we were told that the company does not deal with lumber transportation. The tariffs set by small private companies are by 30% higher than the tariffs of Russian Railways. We are not able to pay such money. Lumber is not selling well at the moment. And we cannot deliver properly even the lumber that can be sold", Valery Palichev, Director of the Sverdles Production Association said. 

Private companies are guided by their own logic. "We can transport a car with lumber to any city, but who is going to pay for its return? - Igor Chushkin, Production Director of the NerudTrans Company asks. - The price for empty car mileage is included in the tariff when cargoes are transported by Russian Railway cars. If cargoes are transported by cars of private companies, the payment is made separately for the freight car and for the

return of the empty car to the dispatch station. If lumber consignors are willing to pay more with consideration for empty car mileage, we are ready to give them cars. However, at the moment, it is more profitable for us to transport metal products, because the related freight charges exceed 4-5 times those that are effective for lumber transportations". 

In the meantime, Russian Railways assure that lumber producers are not cast adrift. There is one more affiliate of the national carrier - the TransLes Company - that specializes solely in lumber transportation. However, the Middle Urals can hardly rely on this company. Local lumber manufacturers remind that TransLes dispatches cars generally to the Far East, Western Siberia and North-Western regions - closer to borders with China and Finland. These countries are the major consumers of Russian lumber. 

In addition, lumber flatcars owned by TransLes are suitable only for transportation of long logs. Sredneuralsk enterprises generally deliver sawn trees or lump wood. These products can be transported only in gondola cars.

TransLes representatives state that "at the moment almost all the requests from Ural companies have been fulfilled". At the same time, the company executives agree that Ural forestry lacks attention from the "lumber affiliate" of Russian Railways. "Our presence in the Ural region is still not sufficient, because most of the lumber cargoes have been transported in gondola cars of Russian Railways. In 2009, we transported 44.4 tons of lumber out of 5.9 million by the Sverdlovsk railroad", Sergey Krivov, General Director of TransLes informed. 

No need in enemies when there are such authorities 

Due to the re-division of the market, the entire industry of the Sverdlovsk Region can be destroyed. "I do not know how we are going to survive under the reforms", V.Palichev exclaims. 

However, lumber producers see rearrangements in railway transportations as a pseudo-market reform, as the division of Russian Railways into numerous affiliates means only de jure breaking up of the existing monopoly. In fact, the company is still controlling the market. The commercialization will provide it and its affiliates with additional leverage that can be applied to consignors. Generation of profit is much more important than sentiments and troubles of unfortunate lumber manufacturers. 

The authorities' objective is to prevent the misalignment. Unprofitable transportations can be subsidized (in the similar way that is applied to commuter services). The authorities can compel carriers to set quotas for delivery of products manufactured by industries that are socially significant for the region. There are ways - only the wish is wanted.

However, the Sredneuralsk authorities prefer to take a back seat in this situation. They do not seem to be concerned that due to this, the local lumber manufacturers will have to "keep the wolf from the door" in winter. For small towns and villages of the Middle Urals, lumber business in most cases is the only way to earn money. For example, Sergey

Kozmenko's company employs about 300 people. Jobs are very limited in Verkhnyaya Tura. It is not difficult to imagine what will happen with several hundreds of families if their breadwinners are left without wages. 

In this case, the local authorities are also going to suffer, receiving less than expected tax revenues. The tax gap will also become wider in the already deficit-ridden budget of the Sverdlovsk Region. At the same time, the team of Alexander Misharin, the former head of the Sverdlovsk Railways and present governor, keeps generating projects like the construction of the Ekaterinburg-Moscow high speed railway and keeps indulging in unsubstantiated illusions.

Marina Sirina 

Moscow Times: For the Record http://www.themoscowtimes.com/business/article/for-the-record/408460.html

17 June 2010

Otkritie said Wednesday that it may sell as much as 15 percent of its merged banks to the International Financial Corp., the World Bank’s private-sector arm, this year. (Bloomberg)

Sistema on Wednesday posted profits of $163.5 million, compared with a net loss of $395.5 million a year earlier, the company said. (Bloomberg)

Activity in the Oil and Gas sector (including regulatory)

Bloomberg: Rosneft Seeks Former BP Stake in Caspian Pipe, Kommersant Says http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aOzWtVYYVgUo

By Maria Ermakova

June 17 (Bloomberg) -- OAO Rosneft is seeking BP Plc’s former stake in the Caspian Pipeline Consortium, Russia’s only non-state oil export link, Kommersant reported, citing unidentified people at OAO Lukoil and the country’s Energy Ministry.

Rosneft, which now holds a 3.83 percent stake in the pipeline through a venture with Royal Dutch Shell Plc, wants to buy the 5.75 percent stake sold by BP to Moscow-based Lukoil for $1.6 billion last year, the newspaper said. Rosneft and Lukoil are discussing the pipeline capacity that Rosneft would get with the stake purchase, according to Vedomosti. Press officials at Rosneft and Lukoil declined to comment to the newspaper.

Last Updated: June 17, 2010 01:22 EDT

17.06.2010

Oil and Gas Eurasia: Ukraine Dictates Pipeline Conditions to EU, Russiahttp://www.oilandgaseurasia.com/news/p/0/news/7666

Ukraine is ready to review the issue of the European Union and Russia managing and modernizing the Ukrainian gas pipeline system in return for guarantees on gas transit, Ukrainian Prime Minister Nikolay Azarov said according to Ukrayinska Pravda. Azarov said Ukraine proposed Russia and the EU determine the volume of gas to be transported for a significant period, for example, 10 years. Azarov added, "Europe should give guarantees to Russia that it will buy this gas from it and Russia should give us guarantees that it will pump the gas across Ukraine and not build by-pass pipelines. In return for these guarantees, Ukraine is willing to consider the EU and Russia's participation in modernizing its gas transport system. Azarov also said that there would be a meeting in Brussels on June 25 between Ukrainian Fuel and Energy Minister Yuriy Boyko and the EU Energy Commissioner Guenther Oettinger at which the two will discuss specific ways to modernize the Ukrainian gas transport system. "In the course of the summer, we will find solutions to this problem and draft a specific plan for 2011 to modernize our gas transport system", Azarov  said according to Rosbalt.Copyright 2010, Vslukh.ru. All rights reserved.

Ukrainian Journal: Prime minister speaks of ‘exit’ from RosUkrEnergo ruling dilemmahttp://www.ukrainianjournal.com/index.php?w=article&id=10575

Journal Staff Report

KIEV, June 16 - Ukraine will have to find ways to settle its dispute over natural gas with gas trader RosUkrEnergo, Prime Minister Mykola Azarov said Tuesday.

“We are thinking how to exit this situation,” Azarov said in an interview with BBC Ukrainian service aired late Tuesday.

Ukraine’s state-owned Naftogaz Ukrayiny was last week ordered by a court of arbitration in Stockholm to return 12.1 billion cubic meters of gas to RosUkrEenrgo.

Moscow Times: Government Puts Off Decision on East Siberian Oil Duties http://www.themoscowtimes.com/business/article/government-puts-off-decision-on-east-siberian-oil-duties/408446.html

17 June 2010The Moscow Times

The government on Wednesday delayed a decision on introducing export duties on East Siberian oil that would deprive three leading oil companies of $378 million in revenues this year alone.

The postponement suggests that there may be changes to the plan to start charging the duty on July 1.

“The Presidium didn't make a decision,” Natural Resources and Environment Minister Yury Trutnev said after the meeting of the scaled-down Cabinet.

Under the latest proposal, the duty measuring 45 percent would apply to the portion of the oil price that is above $50 per barrel, Deputy Prime Minister Igor Sechin said at the meeting.

The government has not been charging a duty since December to encourage development in the region, but the Finance Ministry has insisted on taxing the exports to narrow the budget deficit.

At the current price for Urals crude, which averaged $71 per barrel over the past 30 days, the budget would rake in 11.9 billion rubles ($381 million) by the end of the year, Sechin said.

The proposal calls for introducing a full export duty if oil producers reach the profit rate of 16 percent on their East Siberian operations, Sechin said.

The government still has time for deliberations. It set the duty for June in a decree dated May 26.

Rosneft is the main beneficiary of the tax holiday that accounts for 25 percent of the company's estimated net income this year, investment company Renaissance Capital said in a recent research note. Also developing in East Siberia are Surgutneftegaz and TNK-BP.

China Knowledge: Sino-Russia oil pipeline to start operation at end-Oct

http://www.chinaknowledge.com/Newswires/News_Detail.aspx?type=1&cat=INS&NewsID=34612

Jun. 17, 2010 (China Knowledge) - China National Petroleum Corporation, the country's largest integrated oil and gas enterprise, announced that the Sino-Russia oil pipeline will put into operation on Oct. 31, 2010, the state-owned Xinhua News Agency reported on Monday.

The Sino-Russia oil pipeline, which links Russia's Skovorodino and Daqing, one of China's major oil production and refining bases, together, started construction in 2009.

The 1,000-kilometer long pipeline will be ultimately connected with Russia's East Siberia-Pacific Ocean oil pipeline.

According to the report, the Chinese section of the oil pipeline, which has a length of 927 kilometers, has been welded, while the welding of the Russian section is expected to be finished soon.

Reportedly, the pipeline project had been planning for years. However, the construction did not start until February 2009 when China and Russia signed long-term crude oil supply and delivery contracts.

Pursuant to the agreements, Russia will provide a 20-year 300 million-ton crude oil supply to China in exchange for a US$25-billion loan. 

Reuters: Rosneft, Chevron to develop Russia oil field –sourceshttp://af.reuters.com/article/energyOilNews/idAFLDE65F22320100616

Wed Jun 16, 2010 3:44pm GMT

MOSCOW June 16 (Reuters) - Rosneft (ROSN.MM), Russia's top oil producer, and U.S. rival Chevron (CVX.N) will on Thursday sign an agreement to jointly develop a Russian oil field, two sources close to the talks told Reuters.

One of the sources on Wednesday said the agreement concerns the Val Shatskovo field in the Black Sea, while the second said it was in the Black Sea without naming the field. (Reporting by Ekaterina Golubkova and Darya Korsunskaya, writing by Alfred Kueppers; editing by Maria Kiselyova)

Upstreamonline: Uzbekistan well hits home for partnershttp://www.upstreamonline.com/live/article217990.ece

Russian explorer Lukoil said today it has hit gas during drilling of the first exploration well in the Aral licence in Uzbekistan.

Upstream staff  16 June 2010 12:11 GMT

The well was drilled to 3300 meters with pay zones hit between 2000 metres and 3000 metres, said Lukoil in a statement.

Well testing resulted in gas flows of up to 580,000 cubic meters of per day said the company.

Data is currently being analysed to determine reserve volumes.

Drilling of a second exploration well on Shagala prospect is expected to start this summer.

Investments of the first stage of the project, including seismic and two exploration wells are estimated around $100 million.

The Aral license block is located in the north-west of the Republic of Uzbekistan and includes both onshore and offshore areas of the Uzbek sector of the Aral Sea.

Partners in the licence are National Holding Company Uzbekneftegaz, Lukoil, CNPC, KNOC and Petronas Carigali each holding a 20% stake.

Published: 16 June 2010 12:11 GMT  | Last updated: 16 June 2010 12:12 GMT

Capital.gr: TNK-BP Loses Bid To Recover Interest On Excess Tariffs –Vedomostihttp://english.capital.gr/news.asp?id=992853

Thursday, 17 June 2010 - 03:17

DOW JONES NEWSWIRES

BP PLC's (BP, BP.LN) joint venture in Russia, TNK-BP (TNBP.RS), lost a court battle with federal authorities over its claim of nearly $30 million in interest on overpaid customs duties, business daily Vedomosti reports Thursday.

TNK-BP sued the Federal Customs Service in March, seeking to recover 921.6 million rubles ($29.6 million) in interest because the agency missed a deadline for reimbursing the oil company for its overpayment. On Wednesday, the Moscow Arbitration Court rejected TNK-BP's claim, a company spokesman said. TNK-BP will appeal the decision, he said.

The interest is based on RUB3.9 billion in excess duties on oil exports the company paid for 2006 and 2007 due to an erroneous assessment by the customs service. Last year, TNK-BP got the money back after Russia's Supreme Arbitration Court ruled in a similar case that the agency's refusal to refund overpayments of duties was illegal.

TNK-BP argued that Russian law requires overpayment reimbursements to be made within one month after a claim is filed, company lawyer Eduard Godzdanker said. TNK-BP is owed the interest that accrued during the nearly two years it took the customs service to return the money, he added.

Newspaper website: www.vedomosti.ru

-Dow Jones Newswires; 212-416-2900

17.06.2010

Oil and Gas Eurasia: Kazakhstan Hopes to Find Russia Investor For Pavlodar Refineryhttp://www.oilandgaseurasia.com/news/p/0/news/7673

Kazakhstan hopes to find a Russian investor to buy a 50 percent stake in the Pavlodar refinery, Kazmunaigas Managing Director Daniyar Tiesov said.The refinery has a name-plate capacity of 7.5 million tons per year - over half of Kazakhstan's  total refining capacity of 13 million tons per year. The Pavlodar facility needs to guarantee supplies of crude from Russia to maintain its processing loads."We intend to make the sale on market conditions, I think up to half the capital", Teisov said, while not citing a firm price or the size of the stake. "Of course, we would like to have a large oil company from Russia, in order to solve the issue of stable supplies of Russian oil to the facility for a long time", he added.in June, Kazmunaigas CEO Kairgeldy Kabyldin told Reuters that a deal with would be concluded by the end of 2010. Companies interested in Pavlodar include TNK-BP, LUKOIL and Gazprom neft, Kommersant reports.Copyright 2010, Oil and Gas Information Agency. All rights reserved.

Gazprom

Gulf News: Gazprom sets foot in Djibouti Free Zonehttp://gulfnews.com/business/shipping/gazprom-sets-foot-in-djibouti-free-zone-1.642150

Move is part of Russian energy major's expansion strategy

Staff Report Published: 00:00 June 17, 2010

Dubai: Economic Zones World (EZW) said Wednesday that Gazprom Neft Marine Bunkering, a subsidiary of Russian gas giant Gazprom Energy, has established a base in the Djibouti Free Zone (DFZ).

The move is part of the multinational energy major's expansion strategy. Managed by the Jebel Ali Free Zone Authority (Jafza), the flagship company of EZW, the DFZ is a gateway to East Africa and one of the single most important strategic logistics hubs to provide access to strategic markets in East and Central Africa and beyond, the statement said.

DFZ offers a Jafza-inspired business environment and is located close to global marine terminal operators DP World's Djibouti and Doraleh terminals which attract top international shipping lines including Maersk and MSC.

Gazprom, through its local subsidiary Djibouti Bunkering Company, plans to sell marine fuel to these shipping lines. The company has two storage tanks with a storage capacity of 9,300 cubic metres and a barge in the marine oil terminal Doraleh. The company is awaiting quality control approval for its floating barge and expects to commence operations this month.

Ali Dawood, a senior vice-president at EZW, said: "Djibouti Free Zone, like Jafza, is fully committed to supporting Gazprom's growth plans on the African continent. DFZ is a strategically located gateway linking free zone based companies to millions of customers in key markets in Africa and worldwide."

Andrey Vasiliev, director general of Gazprom Neft Marine Bunker, said: "Gazprom Neft intends to deliver first class bunkering service to the marine industry in the region which will further develop and strengthen our business relations with Djibouti and the continent."

Gazprom is one of the world's largest energy companies and owns a pipeline network of 155,000 km, the largest in the world.

The company has subsidiaries in many industry sectors including geological exploration and hydrocarbons.

Reuters: Gazprom, A2A gas joint venture wins EU approvalhttp://af.reuters.com/article/energyOilNews/idAFBRQ00988520100616

Wed Jun 16, 2010 3:51pm GMT

BRUSSELS June 16 (Reuters) - Russian gas giant Gazprom (GAZP.MM) and Italian utility A2A (A2.MI) gained European Union regulatory approval on Wednesday for their joint venture to market gas in Italy.

The European Commission, the EU antitrust watchdog, said its investigation showed the joint venture, to be called PremiumGas, would not pose any significant barriers to competition.

"The horizontal overlap between the activities of A2A and PremiumGas in the retail supply of gas in Italy is limited and ... the merged entity will continue to face effective competition from other companies," a Commission statement said. (Reporting by Foo Yun Chee, editing by Dale Hudson)

Standart: Gazprom Courting Bulgaria’s Neighbors Over South Streamhttp://paper.standartnews.com/en/article.php?d=2010-06-17&article=33376

THURSDAY, 17 June 2010

Rumania offers the Russians to build gas depots in its territory

Gazprom and Romania have started negotiations over the possible participation of Bulgaria’s northern neighbor in the South Stream gas pipeline project, as concerning the pipeline’s passing through Romanian territory. This has become clear from a statement of Russia’s gas giant Gazprom, who says it was highly possible the pipeline to circumvent Bulgaria and pass through Romania. The maneuver started a year ago when Bucharest first declared its desire to join in the project, but the Russians have so far maintained that no negotiations between Moscow and Bucharest have been going on behind Sofia’s back.Gazprom CEO Alexey Miller and Romania’s economy minister Adrian Videanu had a working meeting in Moscow, yesterday, at which they opened a discussion on the options for the pipeline’s circumventing Bulgaria. The heads of Romania’s gas companies Romgaz and Transgaz also took part in the meeting. Vdeanu and Miller agreed to continue the talks this autumn, when the latter is scheduled to pay a working visit to Bucharest.

Telegraf.by: Contract with Beltransgaz not Dependant on in-Russian Prices, Gazpromhttp://telegraf.by/2010/06/contract-with-beltransgaz-not-dependant-on-in-russian-prices-gazprom.html16.06 18:30

There are no invocations to the rates and dynamics of change of the internal gas prices in Russia in the operating contract between the Russian gas monopolist and Beltransgaz, Sergei Kupriyanov, the official representative of Gazprom, stated, making comments on reaction of the Belarusian authorities to the requirements of Russia to extinguish gas debts in five-day term.

According to Sergei Kupriyanov, if the Belarusian party intends to initiate negotiations on this issue, it is able to do it within the limits of corresponding intergovernmental institutes, but the operating contract should be executed in full, RIA Novosti informs.

The official representative of Gazprom also noticed that today, on June, 16th, the Russian gas monopolist sent the letters once again to Vladimir Mayorov, the Board Director of Beltransgaz, and the Vladimir Semashko, First Deputy Prime Minister of Belarus. Gazprom noticed once again in the letter that "this year Beltransgaz regularly violates conditions of the contract signed on December, 31st, 2006".

"Gazprom warned Belarus about future restriction of gas delivery in the country. This measure will be accepted if Belarus refuses to repay the outstanding debts of Beltransgaz at amount of 200 million dollars. Gazprom denied the charges of the Belarusian party in infringement of contract obligations", Sergei Kupriyanov said.

According to Sergei Kupriyanov, Gazprom proposed to take "exhaustive measures to repay acccumulated debts till June, 21st". The representative of the company noticed also that "otherwise Gazprom will have to exercise the right to impose restriction on gas delivery to Belarus according to the contract clause 6.4".

In turn, the Belarusian party stated that the contract terms providing gradual growth of the lowering factor to the price, were based on principle of synchronous transfer of two countries to the equal prices for gas.

"Russia, postponing transfer on equal prices in its territory, violated the base conditions underlying the contract on gas delivery to Belarus. That's why, it should be reconsidered", an anonymous source in Minsk stated.

As Telegraf informed, Russian President, Dmitry Medvedev, at a meeting with Gazprom's Board chairman, Alexei Miller, gave Belarus five days to decide on payment of the debt for Russian gas delivered in 2010. According to Russian leader, this term is defined "taking into account that we cooperate with Belarus as partners".

"You will contact the heads of Belarusian structures, who deal with this issue, and offer them to repay debt as soon as possible. If this is not done then we'll have to take strict measures", Dmitri Medvedev said.